Daily Morning Report

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

Monday, October 3–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly lower overnight. Markets in mainland China were closed for a holiday. U.S. stock indexes are pointed to mixed openings when the New York day session begins. The marketplace is still uneasy to start the month of October, which history shows can be rocky for the stock and financial markets. There are reports and rumors swirling Monday morning that investment bank Credit Suisse may be in financial trouble. Broker SP Angel this morning said in an email dispatch: “A global tightening of liquidity by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks including Barclays and Bank of America cancelled a $3.9 billion debt offering last week amid a lack of demand. Bloomberg reports a group of underwriters including Goldman Sachs, Bank of America and Credit Suisse took losses estimated at over $1 billion on a debt package to private equity firms amid higher yields and lower demand. Outflows in U.S. investment grade bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks have soared in September, with Credit Suisse’s CEO noting the bank was facing a ‘critical moment.’”

In other overnight news, the U.K. government has scrapped a major part of its tax-cut plan after U.K. and European financial markets became roiled when it was announced. The markets were somewhat assuaged by pivot from the U.K. government.

The Euro zone September manufacturing purchasing managers index (PMI) came in at 48.4 versus 48.5 in August. A reading below 50.0 suggests contraction in the sector.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are sharply higher and trading around $82.80 a barrel. Traders are awaiting an OPEC cartel meeting on Wednesday and may cut production by 1 million barrels a day, reports said. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.787%. 

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the global manufacturing PMI, the ISM report on business manufacturing, construction spending and domestic auto industry sales.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are a bit firmer in early U.S. trading, on short covering after hitting a contract low overnight. Prices last Friday closed at a technically bearish weekly, monthly and quarterly low close. Bears have the solid near-term technical advantage amid a six-week-old price downtrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 at Friday’s high of 3,693.75 and then at 3,751.25. Support for active traders is seen at the overnight contract low of 3,571.75 and then at 3,550.00. Wyckoff’s Intra-day Market Rating: 5.5

December Nasdaq index futures: Prices are near steady in early U.S. trading after hitting a contract low overnight. Prices last Friday closed at a technically bearish weekly, monthly and quarterly low close. Prices remain in a six-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below 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 Friday’s high of 11,357.25 and then at 11,613.50. On the downside, shorter-term support is seen at the overnight contract low of 10,890.75 and then at 10,700.00. Wyckoff’s Intra-Day Market Rating: 5.0.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering and some safe-haven demand. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 128 1/32 and then at 129 even. Shorter-term support lies at the overnight low of 127 4/32 and then at 126 even. Wyckoff’s Intra-Day Market Rating: 6.0

December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering and safe-haven demand. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at last week’s high of 112.30.0 and then at 113.10.0. Shorter-term technical support lies at the overnight low of 111.25.5 and then at 111.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

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 still 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 last week’s high of .9908 and then at 1.0000. Shorter-term support is seen at .9690 and then at the contract low of .9592. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

November Nymex crude oil prices are sharply up in early U.S. trading. Bears are still in overall technical control. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $85.00 and then at $87.00. Look for sell stops just below technical support at the overnight low of $80.87 and then at $80.00. Wyckoff’s Intra-Day Market Rating: 7.0

GRAINS

U.S. grain futures were mixed to firmer overnight. Risk sentiment in the general marketplace remains elevated Monday. On tap today is the weekly USDA export inspections report and the afternoon crop progress reports. Corn, wheat and soybean market bulls have the slight overall near-term technical advantage. However, if the stock and financial markets continue in turmoil, the upside will be limited in the grain futures markets.

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

Friday, September 30–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed overnight, with European stocks mostly up and Asian shares mostly down. U.S. stock indexes are pointed to higher openings when the New York day session begins. The S&P 500 stock index on Thursday closed at a its lowest level in nearly two years. Regarding Friday morning’s firmer stock prices in the U.S. and Europe: “This looks like nothing more than a dead-cat bounce after steep declines over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped,” said Craig Erlam of OANDA.

In overnight news, consumer price inflation in the Euro zone rose to a higher-than-expected 10% in September, year-on-year, from 9.1% in August. European markets are pricing in a more than 70% chance of a 75-basis-point rate hike from the European Central Bank in October.

In other news, the UK second-quarter GDP was revised up from -0.1% to +0.2%.

China’s purchasing managers indexes (PMI) for September came in weaker than expected, further suggesting the world’s second-largest economy is in trouble.

The Reserve Bank of India raised its repo rate by 50 basis points to 5.9% on Friday in its fight against inflation. The decision was widely expected.

Industrial metals prices are rising as the London Metals Exchange (LME) considers banning Russian-mined metals to LME exchange’s warehouses. Aluminum, nickel and copper all have risen on the news.

The key outside markets today see the U.S. dollar index modestly up. Nymex crude oil prices slightly firmer and trading around $81.50 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.688%. 

Today is the last day of the month and of the quarter, making it an extra important trading day from a technical perspective.

U.S. economic data due for release Friday includes personal income and outlays, including the PCE price indexes that the Federal Reserve monitors closely for inflationary pressures. Also due out today is the ISM Chicago business survey and the University of Michigan consumer sentiment survey.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are firmer in early U.S. trading, on short covering from Thursday’s strong losses. Bears still have the solid near-term technical advantage amid a price downtrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,751.25 and then at 3,800.00. Support for active traders is seen at the contract low of 3,613.00 and then at 3,575.00. Wyckoff’s Intra-day Market Rating: 5.5

December Nasdaq index futures: Prices are slightly up in early U.S. trading. Prices remain in a downtrend on the daily bar chart as the index hovers near Thursday’s contract low. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below 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 11,613.50 and then at 11,796.00. On the downside, shorter-term support is seen at the contract low of 11,091.50 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering in a bear market. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 128 31/32 and then at 129 even. Shorter-term support lies at the overnight low of 126 13/32 and then at 126 even. Wyckoff’s Intra-Day Market Rating: 5.5

December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the this week’s high of 112.30.0 and then at 113.10.0. Shorter-term technical support lies at the overnight low of 112.02.0 and then at 111.20.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

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 still in a downtrend on the daily bar chart. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-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 the overnight high of .9908 and then at 1.0000. Shorter-term support is seen at Thursday’s low of .9690 and then at the contract low of .9592. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

November Nymex crude oil prices are slightly firmer in early U.S. trading. Bears are in technical control. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-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 $83.00 and then at $85.00. Look for sell stops just below technical support at $80.00 and then at $78.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

U.S. grain futures were higher overnight, as risk sentiment in the general marketplace has improved just a bit Friday morning. On tap today is the quarterly USDA grain stocks report and the annual small grains summary. Corn, wheat and soybean market bulls have the slight overall near-term technical advantage. However, if the stock and financial markets continue in bearish turmoil, such could signal tops are in place in the grain markets.

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