Daily Morning Report

Monday, October 22–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly firmer overnight. Asian shares gained overnight, led by China’s stock market rallying more than 4% as Chinese economic officials said they are prepared to stimulate the economy, including cutting personal taxes. European stock markets were also up, but worries remain regarding Italy’s budget problems with the European Union, and with Brexit concerns. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

The U.S.-China trade war remains in focus after Trump administration economic advisor Larry Kudlow said China is doing “nothing” to mitigate the matter. Reports last week said President Trump and Chinese leader Xi Jinping will meet at the G20 conference in Argentina in late November.

Thursday’s European Central Bank regular monetary policy meeting will be closely watched by the marketplace. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.

The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are near steady and just above $69.00 a barrel.

U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the greenback. See on the daily bar chart that the dollar bulls had a good week amid several geopolitical matters on the front burner of the marketplace that prompted safe-haven demand for the world’s strongest currency. And those geopolitical developments could see at least one of them escalate in the near term. Don’t be surprised to see the dollar index rally beyond chart resistance located at the summertime high in the coming weeks, or sooner. Stay tuned!

Friday, October 19–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly firmer overnight. China’s stock market rallied after the Chinese government pledged to keep its economy on track and expressed confidence in future growth. This comes after the Chinese stock market dropped to a multi-year low Thursday and the Chinese yuan dropped to a 21-month low against the U.S. dollar. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on modest corrective bounces after solid losses suffered on Thursday.

In overnight news, China’s gross domestic product grew by 6.5% in the third quarter, year-on-year. That was down from the 6.7% growth rate in the second quarter. A rate of 6.6% was expected for the third quarter. The third-quarter figure was the slowest economic growth pace for China in several years.

The Euro currency has been rattled again this week by recurring trader concerns regarding Italy falling into line with European Union rules on country’s budgets.

And don’t be surprised if trader and investor anxiety upticks as the trading session progresses Friday, heading into a very uncertain weekend. This is mainly due to pending results of an investigation into the disappearance of a Saudi journalist that could be a murder and could involve the Saudi Arabian government. The markets were jolted on Thursday when U.S. Secretary Mnuchin backed out of a high-level business conference being held in Saudi Arabia.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are modestly up and are trading below $69.00 a barrel. Still, oil prices hit a four-week low on Thursday amid concerns about worldwide economic growth that could crimp demand for crude.

U.S. economic data due for release Friday is light and includes existing home sales.

–Jim

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Thursday, October 18–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

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

Traders and investors are awaiting the results of a Turkish investigation into the disappearance of a Saudi journalist. The Turks say the journalist was killed and the Saudis deny knowing anything about it. This matter is likely to come to a head in the next few days, with President Trump saying results of the investigation are likely yet this week. If the Saudis are complicit, ramifications for the world markets will be significant. Some press reports say the Saudis killed the journalist.

U.S. Treasury bond yields are on the rise again following FOMC minutes released Wednesday afternoon that were deemed a bit hawkish on U.S. monetary policy.

The key outside markets today find the U.S. dollar index slightly lower on a corrective pullback from Wednesday’s solid gains. Meantime, November Nymex crude oil prices are lower, hit a four-week low and are trading around $69.00 a barrel. Brent crude oil has now fallen below the $80.00-per-barrel level. Rising U.S. oil stockpiles this week are bearish for the oil market.

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See on the daily bar chart for the December e-mini S&P futures that prices have rebounded from last week’s spike low, to gain back about half of the losses seen during the October swoon. Still, major near-term chart damage was inflicted in the sell-off and the bulls have much more work to do in the near term to completely repair that damage. Technical odds still favor a market top being in place for at least the near term, if not the longer term. Stay tuned!

Wednesday, October 17–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, on corrective pullbacks from Tuesday’s strong gains that began to repair the recent serious chart damage. Daily volatility is still elevated compared to recent weeks and months.

The rift between the U.S. and Saudi Arabia regarding a missing Saudi journalist who many think was killed by the Saudi Kingdom remains near the front burner of the marketplace. The U.S. Secretary of State was in Saudi Arabia talking to the king and now is in Turkey to see its president. According to news reports, the Saudi king could be caught up in a cover-up of the reporter’s murder. President Trump said there would be “severe punishment” of the Saudi Kingdom if it is determined it was complicit in the death of the journalist. There is a lot at stake for both sides.

The U.S. economic highlight at mid-week will be the afternoon release of the minutes from the Federal Reserve’s FOMC meeting that was held in late-September. Traders and investors will parse the report for clues on futures direction and timing of U.S. monetary policy, and also focus on comments on the U.S. economy and inflation.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices lower and trading just around $71.50 a barrel.

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