Jim Wyckoff's Morning Report: Markets Mixed to Firmer Overnight

Wed, 22 Jan 2014

GLOBAL - In overnight news, reports said investor demand for a Spanish 10-year note was strong Wednesday.

This follows good demand for sovereign bonds issued by Ireland and Portugal. Less than two years ago these European Union nations were on the verge of financial collapse. It is remarkable how investor sentiment has changed since then. This news continues a trend of upbeat economic data coming out of the EU.

The Bank of Japan kept its monetary policy unchanged at its latest meeting that ended Wednesday. The BOJ has embarked on a very stimulative monetary policy that aims to get yearly inflation up to 2% in two years. Japan has been wracked by deflationary price pressures for many years.

U.S. economic data due for release Wednesday is light and includes the weekly MBA mortgage applications survey, and the weekly Goldman Sachs and Johnson Redbook retail sales reports.

Wyckoff’s Daily Risk Rating: 5.0 (There is no major U.S. economic data out Wednesday, and the world geopolitical front is quiet.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady in early U.S. trading and hovering not far below the recent record high. Bulls remain in firm command. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-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 the record high of 1,846.50 and then at 1,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,827.20 and then at 1,817.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady early today and hit another 14-year high overnight. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-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 located at the overnight high of 3,621.00 and then at 3,635.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,600.00 and then at Tuesday’s low of 3,577.50. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are weaker in early U.S. trading. Bulls are still in overall technical control. Buy stops likely reside just above technical resistance at 16,355 and then at 16,400. Sell stops likely reside just below technical support at 16,300 and then at Tuesday’s low of 16,255. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today on profit taking after hitting a two-month high Tuesday. The bulls have gained some upside near-term technical momentum recently. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 131 14/32 and then at Tuesday’s high of 131 20/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 130 27/32 and then at 130 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are lower early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 124.12.0 and then at Tuesday’s high of 124.18.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 124.00.0 and then at 123.24.0. 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 early today. Bulls still have some upside near-term technical momentum as prices are in a four-week-old uptrend on the daily chart. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.335 and then at Tuesday’s high of 81.525. Shorter-term support is seen at the overnight low of 81.130 and then at 81.000. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

March Nymex crude oil prices are firmer early today and hit a two-week high on short covering. Bulls have gained some upside near-term technical momentum recently. Bears do still have the overall near-term technical advantage. In March Nymex crude, look for buy stops to reside just above resistance at the overnight high of $95.71 and then at $96.00. Look for sell stops just below technical support at $95.00 and then at $94.50. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed to firmer overnight. Soybean bulls have faded badly amid beneficial rains and cooler temperatures reported in Argentina soybean regions this week. Corn bulls are also very weak amid a lack of fresh, bullish news. Wheat bears remain in full technical command amid slack export demand for U.S. wheat. The demand side of the equation for grains will continue to be a major market factor in the grain markets. Grain market bulls are also worried about the seasonal “February Break” phenomenon that seems to pressure the grain futures markets about this time every year.