Tuesday, October 12–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly lower in overnight trading. The U.S. stock indexes are pointed to mixed openings when the New York day session begins. Traders and investors are still a bit nervous as mid-October nears. On the front burner on this day it’s concerns about energy supplies heading into the Northern Hemisphere’s winter. Said Bloomberg in a morning email dispatch: Shortages of coal and natural gas heading into winter are expected to keep demand high. The latest pressure on energy supplies comes from record thermal coal prices in China as key mining regions are hit by flooding. The high cost of power is already feeding through to metal prices, with aluminum rising to the highest since July of 2008.
Rising inflation, due in part to the increasing energy prices, is also making the marketplace uneasy. U.S. inflation reports are due out Wednesday and Thursday mornings and will be closely scrutinized.
The troubled Chinese property Giant, Evergrande, reportedly missed another big debt payment and traders are increasingly worried about a contagion effect.
In other overnight news, Germany’s closely watched ZEW economic conditions index for October was downbeat, showing a “current conditions” reading of 21.6 versus 31.9 in September.
The key outside markets today see the U.S. dollar index near steady. Nymex crude oil futures are slightly up after hitting a seven-year high Monday, and are trading around $80.75 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.598%.
U.S. economic data due for release Tuesday includes the NFIB small business index, the weekly Johnson Redbook and chain store sales reports. The International Monetary Fund world economic outlook is issued today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Prices are still in a five-week-old downtrend on the daily bar chart. 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 bullish early today. Today, shorter-term technical resistance comes in at 4,400.00 and then at last week’s high of 4,421.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,317.25 and then at 4,300.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are firmer in early U.S. trading. Prices are still in a five-week-old downtrend on the daily bar chart. 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 bullish early today. Shorter-term technical resistance is seen at Monday’s high of 14,897.25 and then at last week’s high of 15,001.25. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 14,586.00 and then at 14,500.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher on short covering after hitting a nearly four-month low on Monday. 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 158 21/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 13/32 and then at Monday’s low of 157 3/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher on short covering after hitting a nearly four-month low on Monday. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance is seen at the overnight high of 131.08.0 and then at 131.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.25.5 and then at 131.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The December Euro currency futures are weaker in early U.S. trading. Bears have the solid overall near-term technical advantage. 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 to bearish early today. The Euro currency finds shorter-term technical resistance at Monday’s high of 1.1601 and then at the October high of 1.1656. Buy stops likely reside just above those levels. Shorter-term support is seen at the October low of 1.1544 and then at 1.1500. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are firmer in early U.S. trading. Bulls have the strong near-term technical advantage. 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 to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $82.18 and then at $83.00. Look for sell stops just below technical support at the overnight low of $80.00 and then at Monday’s low of $79.55. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures were mixed overnight. On tap today is the monthly USDA supply and demand report and the weekly USDA export inspections report. Harvesting of the U.S. corn and soybean crops is progressing rapidly and that’s bearish and will limit price gains in corn and soybeans. The corn and soybean market bears have the near-term technical advantage, while the wheat bulls have the firm 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