Thursday, October 17–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly up overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins. Risk appetite among traders and investors is a bit more robust Thursday on reports the U.K. and the European Union have reached a deal for the U.K. to leave the EU (Brexit) under good conditions. The deal needs to be ratified by both governments’ parliaments, however.
The Brexit news is making for a strong rally in the British pound, which has hit a four-month high. The Brexit news also put pressure on safe-haven assets like gold.
Nymex crude oil prices are slightly lower and trading around $53.00 a barrel today. The other key “outside market” sees the U.S. dollar index lower and hitting a six-week low overnight. The greenback is fading, due in part to some downbeat U.S. retail sales data released Wednesday that ups the odds of a Federal Reserve interest rate cut coming yet this year.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction, industrial production and capacity utilization and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit a three-week high in early U.S. trading. Bulls have the firm overall near-term technical advantage but stiff resistance lies just overhead. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the September high of 3,025.75 and then at the contract high of 3,032.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,985.25 and then at 2,966.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher and hit a five-week high in early U.S. trading. Bulls have the firm near-term technical advantage but stiff chart resistance lies just overhead. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the September high of 8,002.50 and then at the contract high of 8,071.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,930.50 and then at 7,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a four-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. 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 bearish early today. Shorter-term technical resistance is seen at 160 even and then at the overnight high of 160 23/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 10/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and hit a three-week low in early U.S. trading. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 129.16.5 and then at 129.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.06.0 and then at this week’s high of 130.17.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is lower and hit a six-week low in early U.S. trading. Bulls are fading. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.845 and then at 98.000. Shorter-term support is seen at the overnight low of 97.220 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. 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 early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $53.79 and then at this week’st high of $54.90. Look for sell stops just below technical support at this week’s low of $52.39 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures posted good gains overnight. Corn was up around 3 cents, soybeans up around 7 cents and wheat about 5 cents higher. The charts for all three grains have turned bullish in recent weeks, which is inviting speculative buying interest, including from the big “funds.” Many of those funds had been short the grains and are being squeezed out of their futures positions now (short covering). Grain traders continue to be concerned about the lack of specifics in the “Phase 1” trade deal between the US and China that was reached last week—one that has yet to be signed. However, comments from both sides on Wednesday seemed to assuage grain traders and suggest a deal could be signed and completed next month. Also bullish for grains is the major winter storm that hit the northern US plains and Corn Belt last week, damaging crops in the field and further delaying an already slow corn and soybean harvesting pace. The slumping US dollar on the foreign exchange market this week is also bullish for US grains, as it makes them less expensive on world markets, where most grain is priced in US dollars.
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