Monday, November 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight, with European shares mostly firmer and Asian shares mostly weaker. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
Expectations for a U.S.-China trade deal have been ratcheted down early this week, following some positive signs on the matter late last week. President Trump late last week sounded upbeat on a deal being reached soon with China. However, Trump’s chief economic advisor Larry Kudlow then downplayed any imminent breakthrough on the U.S.-China trade war.
In another sign that China’s economy is being significantly impacted by the trade war with the U.S., a report over the weekend showed China’s service sector slowed to a 13-month low.
Focus in the U.S. is on Tuesday’s mid-term elections, which many believe will be a referendum on the performance of President Trump. Gains by the Democrats would likely be bearish for the U.S. stock market.
U.S. economic sanctions against Iran go into effect today, including the U.S. penalizing other countries that do business with the regime.
The key outside markets today see the U.S. dollar index slightly lower. Meantime, December Nymex crude oil prices are slightly weaker and trading just below $63.00 a barrel.
U.S. economic data due for release Monday includes the U.S. services PMI, the ISM non-manufacturing index and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading. 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 to bullish early today. Today, shorter-term technical resistance comes in at 2,750.00 and then at last week’s high of 2,766.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,712.75 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index December futures: Prices are slightly up 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. 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 7,000.00 and then at 7,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,944.75 and then at 6,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly up in early U.S. trading today. Bears have the firm overall near-term technical advantage following Friday’s strong selling pressure. Shorter-term moving averages (4- 9- 18-day) are neutral 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 137 15/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 137 1/32 and then at the October low of 136 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are firmer in early U.S. trading. An uptrend 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 below 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 the overnight high of 118.07.0 and then at 118.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 117.31.5 and then at 117.25.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady early today. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 96.450 and then at last week’s high of 96.980. Shorter-term support is seen at 96.000 and then at last week’s low of 95.795. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are and hit a 4.5-month low in early U.S. trading. Bears are in firm near-term technical control. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $64.00 and then at $65.00. Look for sell stops just below technical support at the overnight low of $62.52 and then at $62.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were weaker overnight, as hopes for a U.S.-China trade deal have somewhat diminished from late last week. The grain market bears still have the overall near-term technical advantage. The upside will continue to be limited in the next couple weeks by commercial hedge pressure as U.S. corn and soybean harvesting will be winding down.
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