Friday, November 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. U.S. stock indexes are headed for higher openings when the New York day session begins, on follow-through buying from Thursday’s strong gains. The S&P 500 stock index hit a two-month high overnight and the Nasdaq index notched a six-week high. Stock market bulls are still basking in the glow of a slightly cooler U.S. inflation reading released Thursday morning. The consumer price index report for October came in up 7.7%, year-on-year, versus expectations for a rise of 7.9%, year-on-year, and compares to the 8.2% rise seen in the September report. Thursday’s CPI print may be the most important data point of the month and even the quarter. The slightly cooler reading in the CPI may prompt the Federal Reserve to back off its aggressive monetary policy tightening. Most in the marketplace now expect a 0.5% Fed funds rate hike at the December FOMC meeting, following a string of 0.75% rate increases this year. A Barron’s headline today reads, “The peak in inflation is in sight; markets are going wild.” However, veteran market watchers warn that Thursday’s CPI data was just one inflation report, albeit an important one. In all likelihood there will have to be a series of cooler U.S. inflation reports in order to convince the Federal Reserve its inflation-fighting mission is complete. Fed officials have stated several times the central bank cannot err on the side of letting off the monetary-policy-tightening gas too soon.
A feature in the marketplace late this week has been the plunge in the U.S. dollar index and in U.S. Treasury yields. The USDX continues its drop and hit a 2.5-month low overnight, while the benchmark 10-year U.S. Treasury note sees its yield at 3.811% after trading above 4.0% earlier this week. The U.S. Treasury cash markets are closed today for the Veteran’s Day holiday.
Also somewhat bullish for stock and commodity markets are reports China is easing up a bit on some of its strict Covid restrictions.
The crypto currency markets remain shaky late this week. A takeover of likely insolvent FTX crypto exchange by rival Binance fell through, triggering concerns of a wider crypto market illiquidity contagion.
In overnight news, the Euro zone has forecast its inflation rate for 2022 at 8.5%, year-on-year, and at 6.1% in 2023.
The other key outside market today sees Nymex crude oil prices solidly higher.
U.S. economic data due for release Friday is light and includes the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit a two-month high in early U.S. trading. Bears have lost their overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-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 4,000.00 and then at 4,050.00. Support for active traders is seen at 3,950.00 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are slightly firmer and hit a six-week high in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 11,777.25 and then at 12,000.00. On the downside, shorter-term support is seen at 11,500.00 and then at 11,250.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading, on a corrective pullback from Thursday’s strong gains. A three-month-old downtrend on the daily bar chart has been negated. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 124 10/32 and then at 125 even. Shorter-term support lies at 123 even and then at 122 even. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S. trading, on a corrective pullback from strong gains posted Thursday. A three-month-old downtrend on the daily bar chart has been negated. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 112.19.0 and then at 113.00.0. Shorter-term technical support lies at 112.00.0 and then at 111.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The December Euro currency futures are sharply higher and hit a nearly three-month high in early U.S. trading. Bulls have gained the overall near-term technical advantage. Prices are in a six-week-old uptrend on the daily bar chart. The shorter-term moving averages for the Euro 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 for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.0350 and then at 1.0400. Shorter-term support is seen at the overnight low of 1.0189 and then at 1.0100. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
December Nymex crude oil prices are solidly higher in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below 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 $90.00 and then at $92.00. Look for sell stops just below technical support at $87.50 and then at the overnight low of $86.18. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures were higher in quieter overnight trading. Risk-on attitudes, reports of China easing up on its Covid restrictions and short covering are featured to end the trading week. Corn bulls have lost their slight overall near-term technical advantage. Soybeans bulls also have the slight chart edge. Wheat bears have the near-term technical advantage.
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