Friday, September 30–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with European stocks mostly up and Asian shares mostly down. U.S. stock indexes are pointed to higher openings when the New York day session begins. The S&P 500 stock index on Thursday closed at a its lowest level in nearly two years. Regarding Friday morning’s firmer stock prices in the U.S. and Europe: “This looks like nothing more than a dead-cat bounce after steep declines over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped,” said Craig Erlam of OANDA.
In overnight news, consumer price inflation in the Euro zone rose to a higher-than-expected 10% in September, year-on-year, from 9.1% in August. European markets are pricing in a more than 70% chance of a 75-basis-point rate hike from the European Central Bank in October.
In other news, the UK second-quarter GDP was revised up from -0.1% to +0.2%.
China’s purchasing managers indexes (PMI) for September came in weaker than expected, further suggesting the world’s second-largest economy is in trouble.
The Reserve Bank of India raised its repo rate by 50 basis points to 5.9% on Friday in its fight against inflation. The decision was widely expected.
Industrial metals prices are rising as the London Metals Exchange (LME) considers banning Russian-mined metals to LME exchange’s warehouses. Aluminum, nickel and copper all have risen on the news.
The key outside markets today see the U.S. dollar index modestly up. Nymex crude oil prices slightly firmer and trading around $81.50 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.688%.
Today is the last day of the month and of the quarter, making it an extra important trading day from a technical perspective.
U.S. economic data due for release Friday includes personal income and outlays, including the PCE price indexes that the Federal Reserve monitors closely for inflationary pressures. Also due out today is the ISM Chicago business survey and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading, on short covering from Thursday’s strong losses. Bears still have the solid near-term technical advantage amid a price downtrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 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. 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 3,751.25 and then at 3,800.00. Support for active traders is seen at the contract low of 3,613.00 and then at 3,575.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly up in early U.S. trading. Prices remain in a downtrend on the daily bar chart as the index hovers near Thursday’s contract low. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 11,613.50 and then at 11,796.00. On the downside, shorter-term support is seen at the contract low of 11,091.50 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering in a bear market. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 128 31/32 and then at 129 even. Shorter-term support lies at the overnight low of 126 13/32 and then at 126 even. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid 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 bullish early today. Shorter-term resistance lies at the this week’s high of 112.30.0 and then at 113.10.0. Shorter-term technical support lies at the overnight low of 112.02.0 and then at 111.20.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the overnight high of .9908 and then at 1.0000. Shorter-term support is seen at Thursday’s low of .9690 and then at the contract low of .9592. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly firmer in early U.S. trading. Bears are in technical control. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $83.00 and then at $85.00. Look for sell stops just below technical support at $80.00 and then at $78.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were higher overnight, as risk sentiment in the general marketplace has improved just a bit Friday morning. On tap today is the quarterly USDA grain stocks report and the annual small grains summary. Corn, wheat and soybean market bulls have the slight overall near-term technical advantage. However, if the stock and financial markets continue in bearish turmoil, such could signal tops are in place in the grain markets.
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