Opportunistic Trader Overnight Recap
Top Headlines:

– Markets sold off on news that Huawei’s CFO has been arrested in Canada, reportedly on suspicion of violating U.S. sanctions on Iran. The concern is that the arrest will complicate the trade talks between the U.S. and China.

– OPEC meeting in Vienna on production cuts (awaiting decision). Analysts view anything below a 1M bpd of cuts as bearish by the market

– BOJ Gov Kuroda: Risks for Japan’s economy was tilted to the downside; economy was expanding gradually, negative Q3 GDP growth due to temporary factors like natural disasters

– UK Government reportedly seeking compromise to avoid defeat at Dec 11th vote

Risk aversion is back in full force in the world marketplace Thursday. World stock markets were lower overnight, with U.S. stock indexes set to open sharply lower on strong follow-through selling from big losses Tuesday. U.S. stock and financial markets were closed Wednesday for a national day of mourning the death of former President George H.W. Bush.

There are several bearish factors at work spooking world stock markets. Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and will be extradited to the U.S. Her company may be shipping high tech products to Iran, which would violate U.S. sanctions against Iran. This sparked fears the U.S.-China trade tensions could rise further, despite last weekend’s trade truce between the world’s two largest economies. Chinese government officials said Thursday they are still planning to work with U.S. trade officials over the next 90 days to come to agreement.

A big drop in crude oil prices Thursday is also weighing on trader and investor sentiment. Nymex crude oil prices are sharply lower and trading just above $51.00 a barrel. The OPEC oil cartel is meeting in Vienna, Austria on Thursday. Reports said OPEC heavyweight Saudi Arabia has not yet agreed to a production cut, but that it may before the meeting ends on Friday. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.

Trader are also anxiously awaiting another speech from Federal Reserve Chairman Jerome Powell today, wondering if he will elaborate on U.S. monetary policy direction.

Another feature in the marketplace recently that also has the stock market wobbly is falling U.S. Treasury yields (rising prices). The five-year T-Note yield this week dropped below the lower maturities. A fully inverted yield curve has been historically bearish for the U.S. economy and stock market. Right now the 10-year Treasury note yield remains above the 2-year, so the yield curve is not fully inverted.

The other key outside markets today find the U.S. dollar index modestly higher.

And it’s a very busy day of U.S. economic data due for release Thursday, which includes the weekly jobless claims report, the Challenger job-cuts report, the ADP national employment report, the U.S. international trade report, the U.S. and global services PMIs, manufacturers’ shipments and inventories, the ISM non-manufacturing report on business, monthly chain store sales, and the weekly DOE liquid energy stocks report. Several Fed officials also speak today, including Chairman Powell.

U.S. STOCK INDEXES

March S&P 500 e-mini futures: Prices are sharply lower in early U.S. trading today. Bears are in technical command. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at 2,700.00 and then at the overnight high of 2,718.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,650.00 and then at the November low of 2,630.75. Sell stops are likely located just below those levels.

March Nasdaq index December futures: Prices are sharply lower in early U.S. trading. Bears are in technical control. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 6,700.00 and then at 6,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,658.50 and then at 6,600.00. Sell stops are likely located just below those levels.

U.S. TREASURY BONDS AND NOTES FUTURES

March U.S. T-Bonds: Prices were higher overnight and hit a three-month high. Bulls are in technical control. 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 technical resistance is seen at the overnight high of 143 1/32 and then at 143 16/32 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 142 4/32 and then at 141 16/32. Sell stops likely reside just below those levels.

March U.S. T-Notes: The market was higher and hit a 3.5-month high overnight. 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 120.13.0 and then at 120.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 120.00.0 and then at 119.28.0. Sell stops likely reside just below those levels.

U.S. DOLLAR INDEX

The March U.S. dollar index is near steady in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.610 and then at 96.750. Shorter-term support is seen at 96.350 and then at 96.000.

NYMEX CRUDE OIL

January Nymex crude oil prices are lower in early U.S. trading today. Bears are in firm overall near-term technical control. There are still no early clues that a market bottom is close at hand. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.30 and then at this week’s high of $54.55. Look for sell stops just below technical support at the overnight low of $50.23 and then at $50.00.

GRAINS

Grain futures prices were lower overnight. The bullishness from the U.S.-China trade ceasefire has quickly faded, with new worries about an escalation of the trade war surfacing today. The grain market bears still have the overall near-term technical advantage, but it does appear corn and soybean prices have put in harvest lows.