Wednesday, January 23–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. and world stock markets were hit hard Tuesday on worries about slowing global economic growth and the ongoing trade war between the U.S. and China—the world’s two largest economies. Media reports on Tuesday that the U.S. cancelled a planned mid-level trade officials’ meeting set for this week were denied by the White House, which did allow the U.S. stock indexes to move off of their daily lows.
In overnight news, the Bank of Japan left its interest rates unchanged at its regular monetary policy meeting. However, the BOJ did lower its inflation expectations for the next two years, which continues a worldwide theme of lessening worries about problematic inflationary pressures.
Traders are looking ahead to the European Central Bank’s regular monetary policy meeting on Thursday, including ECB President Mario Draghi’s press conference.
News reports out of the annual World Economic Forum in Davos, Switzerland suggest a somewhat gloomy picture that the elite bigwigs attending are painting, and on several fronts. The U.S., Britain and China governments are not in attendance this year.
The U.S. government remains in partial shut-down mode with no agreement between the Democrats and President Trump to reopen it imminent. This is starting to drag on the U.S. economy, including the lack of fresh economic news to help drive many markets. Many of those markets are seeing some selling pressure due to the uncertainty created by the lack of fresh economic news.
The outside markets today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Johnson Redbook and Goldman Sachs weekly retail sales reports, the monthly house price index, and the Richmond Fed business survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer on a corrective bounce from solid losses Tuesday. Prices are still in an uptrend on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at last week’s high of 2,677.75 and then at 2,700.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,616.50 and then at 2,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index December futures: Prices are firmer in early U.S. trading, on a corrective bounce from solid losses Tuesday. Prices are still in an uptrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 6,750.00 and then at Tuesday’s high of 6,794.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 6,611.50 and then at 6,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading today, reversing Tuesday’s gains. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at Tuesday’s high of 145 17/32 and then at 145 29/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 144 9/32 and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall chart advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 121.17.5 and then at Tuesday’s high of 121.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 121.05.0 and then at last week’s low of 121.02.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 96.150 and then at 96.500. Shorter-term support is seen at 95.665 and then at 95.480. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer in early U.S. trading. Prices are in an uptrend on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $54.51 and then at $55.00. Look for sell stops just below technical support at $53.00 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures were higher overnight on short covering and perceived bargain hunting. The U.S. government closure has created a dearth of fresh fundamental news for the grain markets. The uncertainty over no fresh government is bearish.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS.
Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff