Wednesday, February 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed to weaker overnight. U.S. stock indexes are pointed to slightly higher openings when the New York day session begins.
The market place has pretty much digested new Fed Chairman Jerome Powell’s testimony to U.S. lawmakers Tuesday, in which he sounded a more hawkish tone on U.S. monetary policy. Powell intimated there could be four small U.S. rate hikes this year, beginning in March. His comments pressured the metals markets, U.S. Treasuries and the stock market, while supporting the U.S. dollar index.
In overnight news, the Euro zone February consumer price index was reported at up 1.2% from January’s up 1.3%, year-on-year. The February number was in line with market expectations and is the third month in a row of declining inflation in the Euro zone.
The key outside markets on Wednesday morning see the U.S. dollar index trading modestly higher. Meantime, Nymex crude oil prices are slightly weaker and trading just below $63.00 a barrel. Growing U.S. oil production the past few months is a major factor that is likely to cap oil price advances.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the second estimate of fourth-quarter GDP, the ISM Chicago business survey, pending home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 December e-mini futures: Prices are slightly higher in early U.S. trading. Prices are in a three-week-old uptrend on the daily bar chart. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 2,775.00 and then at this week’s high of 2,789.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,738.00 and then at 2,725.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index December futures: Prices are slightly higher in early U.S. trading. 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 early today. Shorter-term technical resistance is seen at 6,850.00 and then at this week’s high of 7,009.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,893.00 and then at 6,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering in a bear market. Bears still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at Tuesday’s high of 143 17/32 and then at this week’s high of 143 26/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 142 17/32 and then at this week’s low of 142 4/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bears still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 120.00.0 and then at 120.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 119.21.5 and then at 119.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is firmer in early U.S. trading and hit a three-week high overnight. Recent gains begin to suggest a near-term market bottom is in place. The shorter-term moving averages for the dollar index are neutral as the 4-day is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the February high of 90.140 and then at 90.500. Shorter-term support is seen at 89.750 and then at 89.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are slightly weaker in early U.S. trading. Look for buy stops to reside just above technical resistance at $63.50 and then at $64.00. Look for sell stops just below technical support at $62.50 and then at $62.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were mostly higher again overnight. A serious weather market is playing out in Argentina soybean and corn regions, with U.S. wheat regions also very dry. The grain markets are in near-term price uptrends, to suggest more sideways-to-higher price action in the coming days, or longer.