Wednesday, September 28–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed to modestly lower openings when the New York day session begins and at or near for-the-move lows. The marketplace was somewhat assuaged overnight when the Bank of England made a surprise announcement that it will begin purchases of U.K. government bonds in order to stabilize the rattled U.K. bond market. The International Monetary Fund said the U.K. government should re-examine its stated plan to stimulate its economy through massive borrowing and bond sales.
The key outside markets today see Nymex crude oil prices firmer on a corrective rebound after hitting a seven-month low Monday and are trading around $79.00 a barrel.
The U.S. dollar index is higher and hit another 20-year high today. A Barron’s headline today reads, “The greenback has gone ballistic.” The strong U.S. dollar is putting serious pressure on the currencies of many smaller countries, which is very worrisome to those who endured currency crises of past decades. The main concern is a general marketplace contagion developing if secondary currencies dislocations and illiquidity spill over into extreme anxiety and lack of confidence in the global financial transactions system. The Chinese yuan hit a record low against the U.S. dollar today. Major economies have taken steps over the years to prevent another global financial market crisis, but when everyone runs for the exit doors at once, even robust systems can be over-run. Any investment bank or big hedge fund that appears to be in trouble may provide the first clue of a much bigger problem developing. Such a scenario would likely prompt a bigger into the hard assets, safe-haven gold and silver.
Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.896% after rising above 4.0% overnight. The 2-year Treasury note yield is 4.4%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, pending home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower and hit a contract low in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,733.00 and then at 3,783.25. Support for active traders is seen at the overnight contract low of 3,613.00 and then at 3,550.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower and hit a 3.5-month low in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at this week’s high of 11,568.25 and then at 11,796.00. On the downside, shorter-term support is seen at the June low of 11,135.00 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are near steady in early U.S. trading and hit a contract low overnight. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 127 even and then at 127 even. Shorter-term support lies at the overnight contract low of 123 30/32 and then at 123 even. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are higher in early U.S. trading on a corrective bounce after hitting a contract low overnight. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at Tuesday’s high of 112.01.5 and then at this week’s high of 112.22.5. Shorter-term technical support lies at the overnight contract low of 110.19.0 and then at 110.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are lower and hit a contract low in early U.S. trading. Bears have the strong overall near-term technical advantage. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at .9700 and then at this week’s high of .9770. Shorter-term support is seen at the overnight contract low of .9592 and then at .9550. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are a bit firmer in early U.S. trading, on a corrective bounce after hitting a seven-month low Monday. Bears are still in technical control. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $80.00 and then at $81.00. Look for sell stops just below technical support at this week’s low of $76.25 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were mixed overnight. Risk aversion in the marketplace is keeping the grain market bulls very tentative. Corn, wheat and soybean market bulls still have the overall near-term technical advantage. However, if the stock and financial markets continue in bearish turmoil, such could signal tops are in place in the grain markets. Traders are awaiting the quarterly USDA grain stocks and small grains summary reports on Friday morning.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff