Monday, October 28–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up overnight and are now at or near their highs for the year. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Trader and investor optimism remains elevated as weekend reports from China said the Phase 1 part of the U.S.-China trade deal is nearly ready for signing.
The markets are not reacting to the weekend news the U.S. military eliminated the world’s top ISIS terrorist leader.
There was more downbeat economic data coming out of China, as the world’s second-largest economy over the weekend reported its industrial sector profits declined significantly in September.
It’s a very big U.S. economic data week, highlighted by the Federal Reserve’s FOMC meets that starts Tuesday and the important U.S. jobs report that’s out Friday morning. It’s also the busiest week of the U.S. corporate earnings reports season.
Metals traders will see one of the bigger weeks of the year for their markets, as its LME Week in London.
The key “outside markets” today find Nymex crude oil prices slightly weaker in early U.S. trading today and trading around $56.50 a barrel. Meantime, the U.S. dollar index is slightly down.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, advance economic indicators and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up and very near a new high for the year in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,032.25 and then at 3,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 3,000.00 and then at last week’s low of 2,982.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are modestly up in early U.S. trading and hit a new high for the year. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 8,075.00 and then at 8,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,000.00 and then at Friday’s low of 7,918.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a six-week low in early U.S. trading. Bulls have lost their overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 159 even and then at the overnight high of 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 16/32 and then at 158 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and fell to a six-week low in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 129.05.0 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.12.0 and then at the overnight high of 129.18.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. Bulls have stabilized the market. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.680 and then at 98.000. Shorter-term support is seen at Friday’s low of 97.340 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are modestly down in early U.S. trading. Bulls have momentum as prices hit a four-week high overnight. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.85 and then at $57.50. Look for sell stops just below technical support at Friday’s low of $55.60 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed overnight. Corn was down around 1 1/2 cents, soybeans up around 3 cents and wheat down 2 to 5 cents. Harvest weather is a mixed bag for grain traders to start the week. The past several days have been mostly dry in the US Midwest, allowing for good harvest progress. However, this week will see snow, rain and very cold weather hamper the gather of the corn and soybean crops. USDA’s weekly crop progress report Monday afternoon is expected to show US corn harvest at 47% complete versus 30% last week. US soybean harvest is seen at 65% complete versus 46% last week. USDA will issue its first US winter wheat condition rating this afternoon. Grain trader attitudes remain upbeat regarding the US-China trade negotiations. Reports from China over the weekend said the “Phase 1” part of their trade agreement is close to being signed. The US grain markets are still seeing tepid-at-best export demand on the world markets. That export demand needs to pick up for the grain futures markets to see price uptrends continue. Traders will closely examine Monday morning’s weekly USDA export inspections report.
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