Thursday, October 24–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Focus in the U.S. stock market is on a heavy slate of corporate earnings reports this week.
The European Central Bank is holding its regular monetary policy meeting Thursday, which is the last one for outgoing ECB chief Mario Draghi. No major changes in ECB monetary policy is expected at this meeting.
The central bank of Indonesia cut its interest rates today, with Turkey expected to do the same today. The central banks of Sweden and Norway held their interest rates steady at meetings today.
The Euro zone October composite purchasing managers index (PMI) came out at 50.2, which was slightly below expectations. The manufacturing PMI in October was 45.7. A reading below 50.0 suggests contraction in the sector. Germany, the workhorse of the Euro zone economy, had a manufacturing PMI reading of 41.9 in October.
The key “outside markets” today find Nymex crude oil prices weaker in early U.S. trading today and trading around $55.50 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 Thursday includes the weekly jobless claims report, durable goods orders, the U.S. flash manufacturing and services PMIs, new residential sales and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are not far below this year’s highs, but those highs are also stiff technical resistance. 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 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 this week’s 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: 5.5
December Nasdaq index futures: Prices are firmer 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 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 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 7,900.00 and then at 7,850.00. 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 slightly 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. 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 this week’s high of 160 22/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 20/32 and then at this week’s low of 159 2/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly lower 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 neutral early today. Shorter-term support lies at the overnight low of 129.20.5 and then at this week’s low of 129.15.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 130.04.5 and then at 130.10.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
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 this week’s high of 97.390 and then at 97.845. Shorter-term support is seen at the overnight low of 97.055 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 this week’s high of $56.07 and then at $57.00. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed but mostly higher overnight. Corn was up around 1 cent, soybeans up 1 to 3 cents and wheat steady to down 1 cent. The focus of grain traders today will be on the weekly USDA export sales report, including any big purchases from China that might be included. Traders expect US corn sales at 450,000 to 850,000 metric tons (MT), soybeans at 800,000 to 1,600,000, MT, and wheat at 300,000 to 600,000 MT. Gains in the grains have been limited this week by normal autumn harvest hedge pressure from commercials, as farmers sell their newly cut crop. However, limiting selling interest in the futures markets is cool, wet Midwest US weather that is slowing the gathering of the corn and soybean crops. Overall, grain trader attitudes remain upbeat this week, including the US-China trade negotiations that appear to be progressing well and bullish charts. As U.S. harvest winds down in the coming weeks, traders will be watching weather patterns in Brazil and Argentina corn and soybean regions.
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