Jim Wyckoff's Morning Report: Markets Mixed Overnight

Mon, 03 Feb 2014

GLOBAL - There are still some strains on a few of the emerging market currencies to begin the trading week.

The past two weeks have seen keener risk aversion in the market place, as traders and investors fret about some secondary currency problems possibly developing into a world-wide financial market contagion. History has shown such can occur.

These worries have helped to support safe-haven buying interest in gold and in U.S. Treasuries recently. The emerging currency situation has also been a bearish weight on world stock markets. The U.S. stock indexes finished up a dismal month of January, with many stock market watchers repeating the old market adage: “As goes January, so goes the year.”

There was more downbeat economic data coming out of China during the weekend. China’s manufacturing purchasing managers index (PMI) fell to a reading of 50.5 in January from 51.0 in December. The reading was a six-month low. Also, the Chinese non-manufacturing PMI fell to 53.4 in January. Meantime, the European Union’s manufacturing PMI came in at 54.0 in January versus 52.7 in December—the strongest rate in nearly three years. Any PMI reading above 50.0 suggests expansion.

The Chinese Lunar New Year holiday has China on holiday early this week. That is keeping Asian markets somewhat subdued.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, construction spending, the ISM manufacturing report on business, the global manufacturing PMI, and domestic auto sales.

Wyckoff’s Daily Risk Rating: 6.0 (There is still some risk aversion in the market place with the emerging market currency anxiety.)

(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 slightly lower in early U.S. trading. 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 today. Today, shorter-term technical resistance comes in at the overnight high of 1,783.50 and then at 1,790.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 1,762.10 and then at 1,750.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly lower early today. Bulls have faded recently. 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 early today. Shorter-term technical resistance is located at the overnight high of 3,529.50 and then at last week’s high of 3,543.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,500.00 and then at Friday’s low of 3,481.25. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are near steady in early U.S. trading. Prices Friday hit a multi-month low and closed at a bearish weekly and monthly low close. Bulls have faded to suggest a major market top is in place. Buy stops likely reside just above technical resistance at 15,650 and then at 15,700. Sell stops likely reside just below technical support at 15,600 and then at last week’s low of 15,560. 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: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly higher early today. Prices Friday hit a multi-month high and scored a bullish weekly and monthly high close. The bulls 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 last week’s high of 133 31/32 and then at 134 8/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 133 16/32 even and then at Friday’s low of 133 2/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are near steady early today. Bulls have upside technical momentum. Prices Friday hit a multi-month high and scored a bullish weekly and monthly high close. 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 last week’s high of 125.29.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.21.0 and then at the 125.16.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is weaker early today. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 81.440 and then at the January high of 81.525. Shorter-term support is seen at the overnight low of 81.215 and then at 81.000. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

March Nymex crude oil prices are near steady early today. Bulls still have some upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at last week’s high of $98.59. Look for sell stops just below technical support at the overnight low of $96.78 and then at $96.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed overnight. Traders will closely examine Monday morning’s weekly USDA export inspections report. 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.