Wednesday, October 23–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed but mostly weaker overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Caterpillar reported a big earnings miss to the downside this morning, which is pressuring U.S. stock indexes.
The Brexit uncertainty is still weighing on European equities and even some global stock markets, to a lesser degree. The British Parliament is wrangling with U.K. Prime Minister Boris Johnson on the timing of the U.K. leaving the European Union. Johnson wants a resolution to the matter and a Brexit sooner. Parliament is divided on the topic. Right now, October 31 is the official Brexit date.
The Indian Diwali festival begins Friday. Gold demand from Indian consumers usually rises during the festival. However, reports say Indian consumer gold demand could decrease up to 50% this year due to higher gold prices and an increase the country’s gold import duty.
The key “outside markets” today find Nymex crude oil prices higher in early U.S. trading today and trading around $54.20 a barrel. Meantime, the U.S. dollar index is slightly up on a mild corrective bounce from recent selling pressure that drove the index to a nine-week low earlier this week.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly down in early U.S. trading. Bulls still have the solid overall near-term technical advantage but stiff resistance still 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,014.25 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 2,982.00 and then at 2,966.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly lower in early U.S. trading. Bulls have the firm near-term technical advantage but stiff chart resistance lies just overhead, as was seen by Tuesday’s downside reversal. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 7,900.00 and then at 7,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,810.25 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer in early U.S. trading, on short covering after hitting a five-week low Tuesday. Bulls still have the overall near-term technical advantage but are fading and need to show more power this week to avoid near-term technical damage. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 160 18/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 even and then at 159 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering after hitting a four-week low on Tuesday. 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 neutral to bullish early today. Shorter-term support lies at the overnight low of 129.27.0 and then at 129.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 130.04.0 and then at 130.10.0. 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 slightly higher in early U.S. trading, on more mild short covering. Bulls have faded badly recently and near-term chart damage has been inflicted. 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 bullish early today. The dollar index finds shorter-term technical resistance at 97.500 and then at 97.845. Shorter-term support is seen at the overnight low of 97.220 and then at this week’s low of 96.885. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above 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 $54.81 and then at $55.00. Look for sell stops just below technical support at Tuesday’s low of $53.23 and then at this week’s low of $52.85. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were near steady but mostly slightly lower overnight, on some normal chart consolidation from recent gains. Corn was down around 1 cent, soybeans off around 2 cents and wheat up about 1/2 cent. Typical autumn harvest hedge pressure in the futures markets, from farmers selling right away their newly cut crop, is featured and limiting the upside in prices. However, limiting selling interest is cool, wet Corn Belt weather that is slowing the gathering of the corn and soybean crops. Grain traders are still buzzing about the report Tuesday that China wants its domestic crushers to purchase 10 million metric tons of US soybeans. Grain traders still want to see proof of those big China buys showing up in USDA export sales reports—which has yet to occur. Still, grain trader attitudes remain upbeat this week, regarding the US-China trade negotiations that appear to be progressing well. Traders are also watching some recently dry weather patterns in Brazil and Argentina corn and soybean regions. After the U.S. harvest winds down, traders will focus more keenly on South American weather patterns. The recent weakening of the U.S. dollar index is a bullish underlying factor for the grain markets, as it makes US grains cheaper to purchase on the world market, on non-US currency.
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