*OVERNIGHT DEVELOPMENTS*
U.S. trading activity for the week is likely to wind down as the day progresses Wednesday, ahead of the Thanksgiving holiday on Thursday. Typically, Friday finds one of the lightest-volume trading days of the year for U.S. markets.
However, there is a heavy slate of U.S. economic data due for release Wednesday including the weekly MBA mortgage applications survey, the weekly jobless claims report, the ISM Chicago business survey, durable goods orders, pending home sales, the University of Michigan consumer sentiment survey, the weekly DOE liquid energy stocks report, and personal income and outlays.
In overnight news, a European Central Bank official hinted the ECB could begin buying government bonds (quantitative easing) early in 2015. The ECB vice president’s remarks were a bit disappointing to those market watchers who thought the ECB might make the move at its meeting on Dec. 4.
A German government 10-year bond auction Wednesday fetched a record low yield that averaged 0.74%. This underscores investors in Europe continue to be skittish about the European Union economy and are content to be safe with low-yielding German bonds.
The market place is looking ahead to Thursday’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. This could be a “make-or-break meeting for OPEC—or at least its most important meeting in years. Saudi Arabia and Iran will be the key players at the OPEC meeting.
There was another report out Wednesday that said demand for physical gold in China and India continues to increase, most likely due to bargain hunters snapping up gold due to the recent price slide.
(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.)
(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 slightly higher in early trading and hovering just below Tuesday’s record high. 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 record high of 2,065.75 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 2,043.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are firmer in early trading and are trading near Tuesday’s 14-year high. 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 4,315.00 and then at 4,325.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 4,280.75 and then at this week’s low of 4,260.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
Dow futures: Prices are firmer in early U.S. trading and are just below last week’s record high. Buy stops likely reside just above technical resistance at the record high of 17,865 and then at 17,900. Sell stops likely reside just below technical support at Tuesday’s low of 17,765 and then at 17,745. 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: 6.0
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are slightly higher early today and hit a five-week high overnight. Bulls have the near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 141 25/32 and then at 142 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 141 16/32 and then at 141 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 March U.S. T-Notes: Prices are slightly firmer in early trading. Bulls have the slight near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 126.21.0 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.14.5 and then at 126.08.0. 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 slightly higher in early trading. Prices Monday hit a contract and four-year high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 88.280 and then at 88.500. Shorter-term support is seen at the overnight low of 88.060 and then at 88.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are weaker in early U.S. trading. Prices are hovering not far above the recent four-year low. Bears remain in firm overall near-term technical control. Look for buy stops to reside just above technical resistance at the overnight high of $74.48 and then at $75.00. Look for sell stops just below technical support at the overnight low of $73.64 and then at the November low of $73.22. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were mixed but mostly firmer in overnight trading. The grain market bulls are once again showing resilience as the corn and soybean bulls work on re-establishing near-term price uptrends. Wheat still sees a near-term price uptrend in place. Focus has turned to worldwide demand and the prospects for the South American corn and soybean crops. Given the bearish “outside market” forces working against the grains, trading in the grain futures markets could be choppy and sideways into the end of the year.
