Friday, February 1–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
The market place is squarely focused on Friday morning’s U.S. employment report for January. The key non-farm payrolls figure is forecast to come in at up 165,000 versus up 155,000 the previous month. The unemployment rate is forecast at 7.8%, which is unchanged from the previous month. A stronger-than-expected U.S. jobs report would likely be bearish for the gold and silver markets, while a weaker-than-expected report would likely be bullish. Look for more volatile price action in many markets, including gold and silver, in the immediate aftermath of Friday morning’s U.S. jobs data. European stock markets traded firmer overnight, supported by some upbeat manufacturing data coming out of the European Union. The Markit data company reported its monthly purchasing managers’ index at 47.9 in January versus 46.1 in December. Inflation in the EU was reported Friday at 2% on an annualized basis, which is the rate the European Central Bank is targeting. The EU collective unemployment rate held steady in January, at 11.7%. Recent EU economic data suggests the EU economy and the sovereign debt crisis have bottomed out, even though much more heavy lifting is needed among EU countries in the coming weeks and months, or longer. Asian stocks were also higher Friday on ideas China’s economy continues on the upswing. U.S. economic data due for release Friday includes the jobs report, the U.S. manufacturing PMI, the University of Michigan consumer sentiment survey, construction spending, the global manufacturing PMI, the ISM manufacturing report, and domestic auto industry sales.–Jim
The STOCK INDEXES
The March NASDAQ 100 was higher overnight as it extends January’s trading range above the 62% retracement level of the September-November decline crossing at 2715.55. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If March renews 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. Closes below the reaction low crossing at 2698.50 are needed to confirm a downside breakout of the aforementioned trading range. 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 reaction low crossing at 2698.50. Second support is the January 2nd gap crossing at 2665.00.
The March S&P 500 index was higher overnight as it consolidates some of the decline of the past two days. Stochastics and the RSI are overbought but 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 1478.01 would confirm that a short-term top has been posted. If March extends the rally off November’s low, weekly resistance crossing at 1526.50 is the next upside target. First resistance is Wednesday’s high crossing at 1505.90. Second resistance is weekly resistance crossing at 1526.50. First support is the 10-day moving average crossing at 1493.36. Second support is the 20-day moving average crossing at 1478.01.
March T-bonds was lower overnight and remains poised to extend January’s decline. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If March extends this winter’s decline, weekly support crossing at 139-14 is the next downside target. Closes above the 20-day moving average crossing at 144-28 are needed to confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 144-28. Second resistance is the reaction high crossing at 146-17. First support is Wednesday’s low crossing at 142-19. Second support is weekly support crossing at 139-14.
ENERGY MARKETS
March crude oil was lower overnight as it consolidates some of this winter’s rally. 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 December’s low, the 87% retracement level of the September-November decline crossing at 99.78 is the next upside target. Closes below the 20-day moving average crossing at 95.40 are needed to confirm that a short-term top has been posted. First resistance is Wednesday ‘s high crossing at 98.24. Second resistance is the 87% retracement level of the September-November decline crossing at 99.78. First support is the 10-day moving average crossing at 96.65. Second support is the 20-day moving average crossing at 95.40.
CURRENCIES
The March Dollar was lower overnight and trading below December’s low crossing at 79.01 as it extends this week’s decline. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If March extends January’s decline, September’s low crossing at 78.94 is the next downside target. Closes above the 20-day moving average crossing at 79.85 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 79.70. Second resistance is the 20-day moving average crossing at 79.85. First support is the overnight low crossing at 78.97. Second support is September’s low crossing at 78.94.
GRAINS
March corn was higher in overnight trading and trading above the 38% retracement level of the August-January decline crossing at 7.42. The high-range close sets the stage for a steady to higher opening when the day session begins trading. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible
near-term. If March extends the rally off January’s low, the 50% retracement level of the August-January decline crossing at 7.61 3/4 is the next upside target. Closes below the 20-day moving average crossing at 7.18 1/2 would confirm that a short-term top has been posted. First resistance is the overnight high crossing at 7.44 3/4. Second resistance is the 50% retracement level of the August-January decline crossing at 7.61 3/4. First support is the 20-day moving average crossing at 7.18 1/2. Second support is the reaction low crossing at 6.86 1/4.
March wheat was higher overnight and the high-range close sets the stage for a steady to higher opening when the day session begins trading. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near-term. If March extends 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. Closes below the 20-day moving average crossing at 7.70 1/4 would confirm that a short-term top has been posted. 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 7.70 1/4. Second support is January’s low crossing at 7.36 1/4.
March soybeans were higher overnight and poised to extend the rally off January’s low. The high-range close sets the stage for steady to higher prices when the day session begins trading later this morning. 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 aforementioned 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 14.25 would confirm that a short-term top has been posted. First resistance is Thursday’s high crossing at 14.84 1/4. 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 14.25. Second support is January’s low crossing at 13.51 1/2.
