Daily Morning Report

Thursday, October 6–Jim Wyckoff’s Morning Markets Report

Global stock markets were flat to weaker overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins, still on corrective pullbacks after solid gains posted on Monday and Tuesday that were the largest two-day advance in over two years.

Early this week there were some notions in the marketplace that the Federal Reserve could ease up on its aggressive monetary policy tightening. However, stronger U.S. economic data this week and still-hawkish comments from Fed officials have pretty much dashed those notions. One analyst said it’s a misconception to believe the Fed will start to ease as soon as the U.S. economy shows deterioration. He suggested the Fed will have to remain restrictive until inflation starts to drop significantly.

The key outside markets today see the U.S. dollar index higher. The USDX has made a strong rebound from solid early week selling pressure. Broker SP Angel said this morning in an email dispatch: Is the Fed purely combatting inflation by rising interest rates? Personally, we reckon the Fed is happy for higher U.S. interest rates to draw capital out of other economies and back into the U.S. dollar and the U.S. economy. Russia and China have been trying to break the dominance of the U.S. dollar as the global reserve currency. The U.S. Fed is currently demonstrating why the U.S. dollar is a better place to be when risk rises and times get tough. Sadly, the British pound and a few other highly liquid currencies are casualties of the move and easy targets for short sellers. The UK, Europe and others will suffer higher input costs and reduced economic activity as funding moves west unless the BOE, ECB and other central banks opt to match Fed rate rises and risk deepening recession, said the broker.

Meantime, Nymex crude oil prices are near steady and trading around $87.50 a barrel, after OPEC-plus on Wednesday decided to reduce the cartel’s collective oil production by 2 million barrels per day. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.773%.  

Traders and investors are awaiting what is arguably the most important U.S. data point of the week, if not the month: Friday’s employment situation report for September from the Labor Department. The key non-farm jobs number is expected to come in at up 275,000. The August report showed a non-farm jobs rise of 315,000.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, and the monthly retail chain stores report. Several Federal Reserve officials and U.S. Treasury Secretary Yellen are also slated to speak today.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are weaker in early U.S. trading, still on a corrective pullback after the strong gains seen Monday and Tuesday. Bears have the overall near-term technical advantage amid a six-week-old price downtrend still in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in this week’s high of 3,820.00 and then at 3,850.00. Support for active traders is seen at 3,750.00 and then at 3,700.00. Wyckoff’s Intra-day Market Rating: 4.0

December Nasdaq index futures: Prices are weaker in early U.S. trading, on a corrective pullback after strong gains Monday and Tuesday. Prices remain in a six-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 11,729.75 and then at 12,000.00. On the downside, shorter-term support is seen at Wednesday’s low of 11,366.50 and then at 11,200.00. Wyckoff’s Intra-Day Market Rating: 4.5.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are near steady in early U.S. trading. Prices are in a two-month-old downtrend on the daily bar chart. Bears have the firm advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 127 5/32 and then at 128 even. Shorter-term support lies at this week’s low of 126 3/32 even and then at 125 even. Wyckoff’s Intra-Day Market Rating: 5.0

December U.S. T-Notes: Prices are lower in early U.S. trading. Prices are in a two-month-old downtrend on the daily bar chart. Bears have the firm technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 112.22.5 and then at 113.00.0. Shorter-term technical support lies at 112.00.0 and then at this week’s low of 111.25.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

EURO CURRENCY

The December Euro currency futures are weaker in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at 1.0000 and then at this week’s high of 1.0054. Shorter-term support is seen at .9900 and then at Tuesday’s low of .9859. Wyckoff’s Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

November Nymex crude oil prices are slightly down after hitting a three-week high in overnight trading. Bears still have the overall near-term technical advantage but the bulls have momentum. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-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 $89.00 and then at $90.00. Look for sell stops just below technical support at Wednesday’s low of $85.42 and then at Tuesday’s low of $83.22. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

U.S. grain futures were lower overnight. Risk aversion in the general marketplace is a bit keener late this week and that’s bearish for the grains. Corn and wheat bulls have the slight overall near-term technical advantage. Soybean and meal futures bulls have faded recently. Grains will continue to look to the outside markets for direction. U.S. corn and soybean harvest pressure and commercial hedging will likely limit the upside in the grains in the near term. On tap today is the weekly USDA export sales 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

Wednesday, October 5–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed overnight, with European shares mostly weaker and Asian shares mostly firmer. U.S. stock indexes are pointed to lower openings when the New York day session begins, on routine corrective pullbacks after solid gains posted on Monday and Tuesday that were the largest two-day advance in over two years.

Said market analyst Craig Erlam of OANDA: “It’s been a very impressive relief rally, albeit one aided by a rose-tinted interpretation of certain economic indicators and a terrible plunge in the weeks before. This isn’t the time to get carried away but it is understandable that we’re seeing some relief. It all hangs on whether the (recent economic) data is the start of a weakening trend or just a blip, as with the July inflation drop.”

In overnight news, New Zealand’s central bank raised interest rates by 50 basis points, to 3.5%, and hinted of more to come, with policymakers even debating 75 basis points next time, as core inflation remains too high and labor resources are tight.

Today’s OPEC+ meeting is expected to see the cartel make a large crude oil output cut of 1 million barrels or more per day, in response to a weakening global economic outlook.

The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are slightly higher and trading around $86.85 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is falling and presently fetching 3.691%.  

Arguably the most important U.S. data point of the week, if not the month, is Friday’s employment situation report for September from the Labor Department. The key non-farm jobs number is expected to come in at up 275,000. The August report showed a non-farm jobs rise of 315,000.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, U.S. international trade in goods and services data, the U.S. services PMI, the global services PMI, the ISM report in business services, and the weekly DOE liquid energy stocks report.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices lower in early U.S. trading, on a routine corrective pullback after the strong gains seen Monday and Tuesday. Bears have the overall near-term technical advantage amid a six-week-old price downtrend still in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in this week’s high of 3,808.75 and then at 3,850.00. Support for active traders is seen at 3,750.00 and then at 3,700.00. Wyckoff’s Intra-day Market Rating: 4.0

December Nasdaq index futures: Prices are weaker in early U.S. trading, on a normal corrective pullback after strong gains Monday and Tuesday. Prices remain in a six-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 11,675.00 and then at 11,800.00. On the downside, shorter-term support is seen at Tuesday’s low of 11,281.50 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 4.5.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are lower in early U.S. trading. Prices are still in a two-month-old downtrend on the daily bar chart. Bears have the firm advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 128 22/32 and then at this week’s high of 129 12/32. Shorter-term support lies at 127 even and then at 126 even. Wyckoff’s Intra-Day Market Rating: 4.0

December U.S. T-Notes: Prices are lower in early U.S. trading. Prices are in a two-month-old downtrend on the daily bar chart. Bears have the firm technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 113.17.0 and then at this week’s high of 113.30.0. Shorter-term technical support lies at the overnight low of 112.24.5 and then at 112.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

EURO CURRENCY

The December Euro currency futures are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.0054 and then at 1.0100. Shorter-term support is seen at .9900 and then at Tuesday’s low of .9859. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

November Nymex crude oil prices are firmer and hit a three-week high in early U.S. trading. Bears are still in overall technical control but the bulls have momentum. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $88.00 and then at $90.00. Look for sell stops just below technical support at $85.00 and then at Tuesday’s low of $83.22. Wyckoff’s Intra-Day Market Rating: 6.0

GRAINS

U.S. grain futures were lower overnight. Risk aversion in the general marketplace is a bit higher at mid-week and that’s bearish for the grains. Corn and wheat bulls have the slight overall near-term technical advantage. Soybean and meal futures bulls have faded recently. Grains will continue to look to the outside markets for direction. U.S. corn and soybean harvest pressure and commercial hedging will likely limit the upside in the grains in the near term.

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