Daily Morning Report

Friday, November 16–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed in subdued trading overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

In overnight news, the Euro zone consumer price index for October was reported up 0.2% from September and up 2.2%, year-on-year. Those numbers were in line with market expectations.

European traders and investors are still focused on the turmoil in the U.K. government regarding the U.K’s exit from the European Union (Brexit). The uncertainty of the matter has pressured European stock markets, the Euro currency and the British pound.

The key outside markets today find the U.S. dollar index trading slightly lower but still not far below this week’s 1.5-year high. The strong U.S. economy compared to most other world economies, and the interest rate differentials in those economies that see U.S. rates significantly higher, are bullish underlying elements that are likely to continue to provide strong support for the greenback.

Meantime, Nymex crude oil futures prices are higher on a corrective bounce after hitting and 11-month low of $54.75 earlier this week. The steep slide in oil prices is a bearish element for most of the raw commodity sector, as oil is arguably the leader of that sector.

U.S. economic data due for release Friday includes industrial production and capacity utilization, the Kansas City Fed manufacturing survey, and Treasury international capital data.

–Jim

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The Nymex crude oil futures market careened to an 11-month low below $55.00 a barrel on Tuesday. In less than six weeks’ time the oil market has dropped over $20.00 a barrel in price. There are no early chart clues to suggest the steep price decline is ending. However, it’s likely that majority of the down-move in this bear market in oil has already occurred. Also, the crude oil futures market is short-term oversold and due for a good corrective upside bounce very soon. See at the bottom of the chart that the Relative Strength Index (RSI) is presently reading 9.43. Any RSI reading below 30.00 suggests a market is overdone on the downside and due for a corrective rebound. Stay tuned!

Wednesday, November 14–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed overnight. Asian shares were mixed to firmer and European stock indexes were mostly lower. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.

The big drop in crude oil prices has spooked the world marketplace. Nymex crude oil futures prices are near steady today, after careening to an 11-month low of $54.75 a barrel on Tuesday. In less than six weeks’ time Nymex crude prices have dropped by over $20 a barrel. The steep slide in oil prices is a bearish element for most of the raw commodity sector, as oil is arguably the leader of that sector.

European investors are unsettled at mid-week. Reports said U.K. Prime Minister Theresa May has told her cabinet members to back her on her Brexit agenda, or quit. The Euro currency fell to a 16-month low against the U.S. dollar on Monday. Italian bond yields rose to a three-week high today as the Italian government and EU officials wrangle over the specifics of Italy’s budget.

In other overnight news, China’s industrial output was reported up a better-than-expected 5.9% in October, year-on-year. However, China’s retail sales rose by 8.6% in October, which is down from a 9.2% pace in September, year-on-year.

Germany’s gross domestic product shrank 0.8% in the third quarter, for the slowest pace of growth for the leading European Union economy in over five years. Meantime, the Euro zone GDP was reported up 0.2% in the third quarter, and up 1.7%, year-on-year, which was in line with market expectations.

The U.S. dollar index is trading firmer today and not far below this week’s 1.5-year high.

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Tuesday, November 13–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed overnight. Asian shares were down and European stock indexes were mostly up. U.S. stock indexes are pointed toward higher openings when the New York day session begins, following steep losses suffered on Monday. Volatility in the U.S. stock market has heated up again early this week. Many traders and investors are spooked by the recent sharp drop in crude oil prices.

Nymex crude oil futures prices are lower again today, hit an eight-month low overnight and are trading around $58.50 a barrel.

Meantime, the U.S. dollar index is trading slightly lower on a mild corrective pullback after soaring to a 1.5-year high on Monday.

European investors are unsettled as Tuesday is the day Italy’s budget is supposed to fall into line with the constricts of the European Union budget process. Meantime, reports said U.K. Prime Minister Theresa May has rejected the latest European Union Brexit proposal. The Euro currency fell to a 16-month low against the U.S. dollar on Monday.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index and the monthly Treasury budget statement.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the greenback. The USDX this week has powered to a 16-month high, due in part to a U.S. economy that is diverging with the other major world economies. The U.S. economy his growing at a very good clip not seen in years, while most of the other major world economies continue to limp along. U.S. interest rates are also on the rise, and at a faster pace than the other major world economies. That’s also bullish for the U.S. currency as world investors seek out higher returns in U.S. assets that have to be purchased in U.S. dollars. Stay tuned!

Monday, November 12–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed overnight, with European shares mostly weaker and Asian shares mostly firmer. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.

China’s stock market did post a modest rebound Monday as Alibaba’s “singles day” sale saw Chinese consumers buy $30.8 billion in goods on-line Sunday. That beat last year’s 24-hour total of $25.3 billion.

The U.S. government is closed today for the Veterans Day holiday.

The key “outside markets” today find the U.S. dollar index solidly higher and hitting a 16-month high overnight. The Euro currency hit a 16-month low against the greenback. Meantime, Nymex crude oil futures prices are firmer and trading around $60.50 a barrel after hitting a seven-month low on Friday. Reports today say Saudi Arabia will cut its oil exports and prod the OPEC oil cartel to lower its collective crude oil production, in the wake of the recent steep downdraft in oil prices.

There is no major U.S. economic data due for release Monday, due in part to the federal holiday.

–Jim

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