Daily Morning Report

Friday, October 12–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly firmer overnight on corrective bounces from this week’s strong selling pressure. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. However, keep your seatbelts buckled today because volatility is likely to remain high on this last trading day of the week, heading into an uncertain weekend not knowing what to expect come Monday morning.

Price action this week from a technical perspective strongly suggests the U.S. stock indexes have put in near-term tops, if not major tops. If so, such is a bullish development for the competing hard assets like the metals.

Gold prices have backed off a bit today after the strongest one-day gains in over two years were seen on Thursday. Now, the yellow metal is in a much better technical posture to suggest higher prices are likely in the coming weeks, or longer.

News U.S. President Trump and Chinese leader Xi Jinping will sit down and talk in November at the G20 meeting in Argentina could be helping to assuage market concerns today. For months the two largest economies have been on a downhill slide in relations. The Chinese yuan rebounded against the U.S. dollar today, in part on that news.

Another worrisome factor in the marketplace this week is notions the strong U.S. economic expansion could be coming to an end, due in part to a Federal Reserve monetary policy that got too aggressive in raising interest rates. President Trump again admonished the Fed this week for raising rates too fast. He called the Fed “crazy” and “loco.”

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Global stock markets have been hammered this week. U.S. stock indexes are at three-month lows. Price action this week strongly suggests the U.S. stock indexes have put in near-term tops, if not major tops. The sharp decline in the Chinese yuan against the U.S. dollar is in focus again late this week. The depreciating yuan makes China’s exports cheaper on the world market, but it also invites capital outflows from China. The U.S. has warned China about using its currency to gain world trade advantages. The keen risk aversion now in the marketplace is also due in part to rising world government bond yields, with the implications being rising inflation along with the negative impact on global stock markets. U.S. Treasury prices are actually higher today, on safe-haven demand. Discussion among traders and investors now is whether the Fed will take its foot off the gas on raising U.S. interest rates. President Trump on Wednesday, following the U.S. stock market sell-off, said “the Fed is making a mistake” and “I think the Fed has gone crazy.” Such rhetoric from the U.S. president will surely garner the attention of the Fed’s FOMC members who set interest rate policy. Stay tuned!

Thursday, October 11–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were hammered lower overnight,
following the U.S. stock-market pounding that took place
Wednesday. China’s stock market dropped over 5% and hit a
four-year low overnight. U.S. stock indexes are poised for
sharply lower openings and will be at three-month lows when
the New York day session begins. You were warned in this
report on Monday that the U.S. stock indexes were showing
clues of topping out. Price action Wednesday and today
strongly suggest the U.S. stock indexes have put in near-
term tops, if not major tops.

The sharp decline in the Chinese yuan against the U.S.
dollar is in focus again late this week. The depreciating
yuan makes China’s exports cheaper on the world market, but
it also invites capital outflows from China. The U.S. has
warned China about using its currency to gain world trade
advantages.

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Wednesday, October 10–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly lower overnight. U.S. stock indexes are poised for weaker openings when the New York day session begins.

The markets appeared to take in stride another admonishment to the Federal Reserve from President Trump. Trump Tuesday afternoon said the Fed is acting too quickly on raising interest rates, given the low inflationary pressures at present.

In overnight news, the U.K.’s gross domestic product grew by 0.7% in the three months ending in July versus the previous three months.

The key U.S. data point of the day will be the producer price index report for September, which is expected to come in at up 0.2% from August.

The outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are near steady and trading just below $75.00 a barrel. Hurricane Michael in the U.S. Gulf of Mexico has shut in a good portion of U.S. oil production in the region.

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There is still some risk aversion in the world marketplace this week. And there are now early chart clues the U.S. stock indexes have put in at least near-term market tops, if not major tops. The S&P and Nasdaq stock indexes last Friday posted bearish weekly low closes and their near-term price uptrends have stalled out. Remember, too, that it’s October–a historically unkind month to the stock market. World equity markets are still rattled by rising government bond yields that are pulling investor interest away from stocks. The benchmark U.S. 10-year Treasury note on Tuesday hit a yield of 3.25%, which is a 7.5-year high. Stay tuned!

Tuesday, October 9–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed overnight. U.S. stock indexes are poised for weaker openings when the New York day session begins. There is still some risk aversion in the world marketplace Tuesday. And there are now early chart clues the U.S. stock indexes have put in at least near-term market tops, if not major tops.

World equity markets are still rattled by rising government bond yields that are pulling investor interest away from stocks. The benchmark U.S. 10-year Treasury note on Tuesday hit a yield of 3.25%, which is a 7.5-year high.

The world’s two largest economies are continuing to escalate their trade war that has also now turned into a war of words. The U.S. secretary of state and Chinese foreign minister exchanged harsh words on Monday.

The International Monetary Fund on Monday lowered its world economic growth forecasts due to the U.S.-China trade war and the presently shaky secondary world currency markets. This week, the Chinese yuan is in focus as it continues to depreciate against the U.S. dollar even as Chinese monetary officials work to stem the yuan’s slide.

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