Jim Wyckoff's Morning Report: Markets Mixed Overnight

Thu, 30 Jan 2014

GLOBAL - World stock and financial markets have calmed a bit amid the recent strains on some non-major world currencies.

However, it’s likely this matter will be back on the front burner of the market place soon. This week’s FOMC meeting is out of the way and the continued $10 billion reduction in monthly bond-buying by the Fed was not unexpected and had little impact on markets.

The HSBC China manufacturing final PMI reading for January came in at 49.5 versus 50.5 in December, it was reported Thursday. This latest figure follows the weaker China PMI number posted last week, which is partly attributed to the emerging currencies market turmoil.

In other overnight news, European Union’s Economic Sentiment Indicator report came in at 100.9 in January from 100.4 in December. This is the highest ESI reading in 2.5 years. This report continues a trend of upbeat EU economic data that suggests the bloc is on the road to economic recovery, albeit slowly.

The Chinese Lunar New Year holiday has China on holiday for the next week. The world’s largest nation and second-largest economy being shut down for several days will likely make for subdued trading action in Asia during the Chinese holiday.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the advance gross domestic product, and pending home sales.

Wyckoff’s Daily Risk Rating: 6.5 (The markets could show a reaction to Thursday’s U.S. economic data releases, or see the emerging market currency anxiety flare up quickly.)

(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 firmer in early U.S. trading on a corrective, short-covering bounce from recent selling pressure. Bulls have faded recently. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at 1,790.00 and then at this week’s high of 1,801.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,764.00 and then at 1,750.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today on short covering. Bears still have some downside momentum on their side. The shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is located at 3,500.00 and then at 3,515.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,471.00 and then at this week’s low of 3,454.25. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer in early U.S. trading on a short-covering bounce. Bulls have faded to suggest a major market top is in place. Buy stops likely reside just above technical resistance at 15,750 and then at 15,800. Sell stops likely reside just below technical support at 15,700 and then at this week’s low of 15,640. Shorter-term moving averages are bearish early today, as the 4-day moving average is below 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: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today on a downside correction from solid gains posted Wednesday, which saw prices hit a three-month high. The bulls still have upside near-term technical momentum. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133 19/32 and then at this week’s high of 133 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 6/32 even and then at 133 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are weaker on profit taking after hitting a two-month high on Wednesday. Bulls still have some upside technical momentum. 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 early today. Shorter-term resistance lies at the overnight high of 125.20.5 and then at this week’s high of 125.23.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.08.0 and then at the 125.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The March U.S. dollar index is solidly higher early today on more short covering and following the FOMC taper continuance. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.025 and then at 81.250. Shorter-term support is seen at 80.750 and then at the overnight low of 80.635. Wyckoff's Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

March Nymex crude oil prices are firmer early today and hit a fresh four-week high overnight. Bulls have upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at $98.50 and then at $99.00. Look for sell stops just below technical support at the overnight low of $97.33 and then at $97.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed overnight. Traders will closely examine Thursday morning’s weekly USDA export sales report. There could be some Chinese soybean cancellations, as rumored by the market place. U.S. corn, soybeans and wheat all need shots of fresh world export demand. Technically, soybean bulls and bears are on a level playing field, but the bulls are fading again. Corn and wheat market bears are in full command. The demand side of the equation for grains will continue to be a major market factor in the grain markets. South American corn and soybean growing weather is deemed mostly favorable and so far a non-issue for the markets.