* Latest Market Developments *
In an unexpected move overnight, China’s central bank reduced its interest rates in order to stimulate a decelerating China economy, which is the second-largest in the world. The past few months have seen China economic growth data that has generally disappointed the market place. The move by China is a bullish development for the raw commodity sector and also helped to boost stock markets worldwide.
In other overnight news that was deemed bullish for stocks and commodities markets, European Central Bank president Mario Draghi on Friday reiterated the ECB will use all means within the ECB’s mandate to return the EU to its inflation target, including implementing quantitative easing—and said the ECB will do it quickly.
U.S. S&P and Dow stock index futures hit record highs overnight, while the Nasdaq notched a 14-year high on the China and Draghi news. The U.S. dollar index is sharply higher and trading near a four-year high early Friday, while the Euro currency is sharply down on the latest Draghi remarks.
The market place is looking ahead to next week’s OPEC meeting. Some believe the beleaguered oil cartel could reduce its overall daily oil production quota, or at least call for strict adherence to existing quotas, most of which are ignored by OPEC nations. Nymex crude oil futures are trading not far above the recent three-year low.
U.S. economic data due for release Friday is light and includes the Kansas City Fed manufacturing survey.
(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)
Wyckoff’s Daily Risk Rating: 5.0 (Geopolitical risks have been moved to the back burner of the market place…for now. The still-simmering Russia-Ukraine conflict could be the next geopolitical hotspot to escalate.)
(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 Wyckoff
U.S. STOCK INDEXES
S&P 500 March e-mini futures: Prices are higher in early trading and hit a record 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 and 18-day. The 9-day is above 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 the overnight high of 2,060.50 and then at 2,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,050.00 and then at the overnight low of 2,043.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
Nasdaq index futures: Prices are higher in early trading and hit a 14-year high overnight. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 4,274.25 and then at 4,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,250.00 and then at the overnight low of 4,240.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
Dow futures: Prices are higher in early U.S. trading and hit a record high overnight. Buy stops likely reside just above technical resistance at 17,850 and then at 17,900. Sell stops likely reside just below technical support at 17,750 and then at 17,700. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-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: 6.5
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are slightly weaker early today. Bulls and bears are on a level near-term technical playing field amid recent choppy trading. Shorter-term moving averages (4- 9- 18-day) are still 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 140 13/32 and then at this week’s high of 140 26/32. Buy stops likely reside just above those levels. Shorter-term support lies at 139 20/32 and then at this week’s low of 139 19/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 March U.S. T-Notes: Prices are lower in early trading. Bulls and bears are on a level near-term technical playing field amid choppy trading. Shorter-term moving averages (4- 9- 18-day) are still 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 125.29.5 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 125.17.0 and then at 125.10.0. 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 sharply higher in early trading. Prices are near last week’s contract and four-year high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the contract high of 88.550 and then at 88.750. Shorter-term support is seen at 88.000 and then at the overnight low of 87.700. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
January Nymex crude oil prices are higher in early U.S. trading, on short covering. Prices are hovering not far above the recent four-year low. Bears remain in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at the overnight high of $77.40 and then at $78.00. Look for sell stops just below technical support at $76.50 and then at $76.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures markets were mostly weaker in overnight trading. The grain market bulls are fading as near-term price uptrends have been negated in corn and soybeans. Prices rebounded Thursday and if the bulls can show good follow-through strength on Friday they will be right back in business.
