Thursday, January 24–Jim Wyckoff’s Morning Web Log
Note: I am out of the office this morning. My friend and fellow analyst/trader Ken Seehusen produced most of my morning report. Ken’s style is a bit different than mine, but I think you’ll also benefit from Ken’s work.–Jim
Overnight Developments
European and U.S. stocks were pressured overnight as Apple’s earnings report was deemed to have fallen short of expectations. The U.S. Nasdaq index was solidly lower as Apple is a big part of the Nasdaq index’s price structure. Economic data released from the European Union Thursday was a mixed bag. French business conditions were downbeat in January, while the overall business PMI for the Euro zone showed contraction, but at the slowest rate of contraction in 10 months. Spanish and Italian bond yields rose following news that Spain’s unemployment rate rose to an all-time high in the fourth quarter of last year. In Asia, HSBC’s monthly PMI for China rose to a two-year high of 51.9 in January versus 51.5 in December. The annual World Economic Forum is taking place in Davos, Switzerland. Market watchers will be looking for any significant news coming out of the meeting. In other overnight news, reports said North Korea has said it will test a nuclear bomb.–Jim
The STOCK INDEXES
The March NASDAQ 100 gapped down and was sharply lower overnight consolidating some of this month’s rally. Stochastics are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 2708.92 are needed to confirm that a short-term top has been posted. If March extends the rally off the late-December low, the 87% retracement level of the September-November decline crossing at crossing at 2804.15 is the next upside target. First resistance is the 75% retracement level of the September-November decline crossing at crossing at 2761.06. Second resistance is the 87% retracement level of the September-November decline crossing at 2804.15. First support is the 20-day moving average crossing at 2708.92. Second support is the January 2nd gap crossing at 2665.00.
The March S&P 500 index was lower overnight as it consolidates some of the rally off November’s low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If March extends the rally off November’s low, weekly resistance crossing at 1526.50 is the next upside target. Closes below the 20-day moving average crossing at 1455.56 would confirm that a short-term top has been posted. First resistance is Tuesday’s high crossing at 1491.20. Second resistance is weekly resistance crossing at 1526.50. First support is the 10-day moving average crossing at 1475.07. Second support is the 20-day moving average crossing at 1455.56.
March T-bonds was higher overnight and is poised to renew this month’s rally. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. Closes above the reaction high crossing at 146-17 would confirm that a short-term low has been posted while opening the door for additional gains into the end of January. If March renews the decline off December’s high, September’s low crossing at 143-08 is the next downside target. First resistance is the reaction high crossing at 146-17. Second resistance is the January 2nd gap crossing at 146-23. First support is the reaction low crossing at 143-17. Second support is September’s low crossing at 143-08.
ENERGY MARKETS
March crude oil was higher overnight as it bounced off support marked by the 10-day moving average crossing at 95.05. Stochastics and the RSI are overbought and are turning neutral to bearish warning bulls to use caution as a pause or setback in the current rally is possible. Closes below the 20-day moving average crossing at 93.90 are needed to confirm that a short-term top has been posted. If March extends the rally off December’s low, the 75% retracement level of the September-November decline crossing at 97.46 is the next upside target. First resistance is Wednesday’s high crossing at 96.92. Second resistance is the 75% retracement level of the September-November decline crossing at 97.46. First support is the 10-day moving average crossing at 95.05. Second support is the 20-day moving average crossing at 93.90.
CURRENCIES
The March Dollar was higher overnight as it extends this correction off last week’s low. Stochastics and the RSI are neutral signaling that sideways to higher prices are possible near-term. Closes above the reaction high crossing at 80.27 are needed to confirm that a short-term low has been posted. If March renews this month’s decline, December’s low crossing at 79.01 is the next downside target. First resistance is the reaction high crossing at 80.27. Second resistance is December’s high crossing at 81.05. First support is last week’s low crossing at 79.40. Second support is December’s low crossing at 79.01.
GRAINS
March corn was lower overnight as it consolidates below the August-November downtrend line crossing near 7.28 3/4. The low-range close sets the stage for a steady to lower opening when the day session begins trading. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that additional setbacks are possible near-term. Closes below the 20-day moving average crossing at 7.05 3/4 would confirm that a short-term top has been posted. Closes above the aforementioned downtrend line and the reaction high crossing at 7.35 would confirm a trend change while opening the door for a possible test of the 38% retracement level of the August-January decline crossing at 7.42. First resistance is the August-November downtrend line crossing near 7.28 3/4. Second resistance is the 38% retracement level of the August-January decline crossing at 7.42. First support is the overnight low crossing at 7.16. Second support is the 20-day moving average crossing at 7.05 3/4.
March wheat was lower overnight as it extends this week’s decline following Tuesday’s key reversal down. The low-range close sets the stage for a steady to lower opening when the day session begins trading. Stochastics and the RSI are turning bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 7.67 would confirm that a short-term top has been posted. If March renews the rally off this month’s low,
the 38% retracement level of the November-January decline crossing at 8.10 1/2 is the next upside target. First resistance is the 38% retracement level of the November-January decline crossing at 8.10 1/2. Second resistance is the 50% retracement level of the November-January decline crossing at 8.33 1/4. First support is the 20-day moving average crossing at 7.67. Second support is this month’s low crossing at 7.36 1/4.
March soybeans were lower due to bearish South American weather forecast overnight. The low-range close sets the stage for a steady to lower opening when the day session begins trading. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If March renews this month’s rally, the 38% retracement level of the September-January decline crossing at 14.95 1/4 is the next upside target. Closes below the 20-day moving average crossing at 14.07 3/4 would temper the near-term friendly outlook. First resistance is Tuesday’s high crossing at 14.60 3/4. Second resistance is the 38% retracement level of the September-January decline crossing at 14.95 1/4. First support the 20-day moving average crossing at 14.07 3/4. Second support is this month’s low crossing at 13.51 1/2.
