Friday, October 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight, on generally upbeat corporate earnings that were reported late this week. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
Gold prices are slightly lower and hit a three-week low overnight, amid a lack of risk aversion in the marketplace. Gold and silver bears have downside technical momentum.
The currency markets are still feeling the effects of Thursday’s European Central Bank monetary policy meeting, which resulted in no interest rate changes from the ECB. However, the central bank said it is reducing its monthly bond-buying program amount by half, but is extending the timeframe of the bond buying. ECB Chief Mario Draghi’s press conference sounded a dovish tone on monetary policy, which has pressured the Euro currency to a three-month low Friday morning. Meantime, the U.S. dollar index pushed to a three-month high Friday. The marketplace is a bit unsettled by the appearance of U.S. Federal Reserve monetary policy and ECB monetary policy that are diverging.
Traders and investors are awaiting what is the most important U.S. economic report of this week: Friday morning’s advance third-quarter GDP estimate. The number is expected to come in at up 2.7% versus the second-quarter reading of up 3.1%.
The other key “outside market” on Friday morning finds Nymex crude oil futures prices slightly lower and trading above $52.00 a barrel. Oil prices remain in a near-term uptrend.
Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are firmer in early U.S. trading. Bulls still have the firm overall near-term technical advantage and there are no strong, early technical clues that a market top is close at hand. The 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 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 the contract high of 2,577.25 and then at 2,590.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,557.50 and then at this week’s low of 2,541.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index December futures: Prices are higher in early U.S. trading and back near the contract high. Bulls have the solid technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 6,132.75 and then at 6,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,078.75 and then at 6,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly higher on short covering after hitting a five-month low overnight. Bears have the 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 early today. Shorter-term technical resistance is seen at Thursday’s high of 151 22/32 and then at 152 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 150 10/32 and then at 150 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly higher on tepid short covering after hitting a 5.5-month low on Wednesday. Bears have the 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 resistance lies at Thursday’s high of 124.23.5 and then at 124.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.06.0 and then at 124.00.0. 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 higher and hit a 3.5-month high in early U.S. trading. The shorter-term moving averages for the dollar index are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above 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 95.00 and then at 95.250. Shorter-term support is seen at 94.500 and then at 94.100. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady in early U.S. trading. Bulls have the overall near-term technical advantage amid a near-term price uptrend being in place. Look for buy stops to reside just above technical resistance at the September high of 53.11 and then at $54.00. Look for sell stops just below technical support at $52.00 and then at this week’s low of $51.55. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were mixed overnight. Not much new. Harvest progress in the U.S. Corn Belt proceeding well. Recent price action in the grains still hints at market bottoms in place.