Thursday, October 29–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session firmer on a corrective bounce from Wednesday’s sharp losses. More and more, traders and investors are taking a very dim view of the Covid-19 prospects over the coming winter. Europe is on a worse trajectory than the U.S., but health experts say the U.S. is about four weeks behind Europe. France is on complete lockdown for the second time this year, while other European countries are in varying degrees of increasing business shutdowns. Concerns about the approaching U.S. presidential election and the transfer of power if Joe Biden wins are also in the marketplace.
It’s a very busy day for U.S. corporate earnings, including heavyweights Apple, Alphabet, Facebook, Amazon and Twitter.
The European Central Bank and Bank of Japan both met Thursday. The BOJ kept its monetary policy unchanged. The ECB meeting was still in progress as of this writing.
The important outside markets early today see the U.S. dollar index firmer as the greenback bulls are having a good week. Nymex crude oil prices are lower and hit a 4.5-month low, trading around $35.85 a barrel. The breakdown in crude oil prices this week, which produced serious technical damage on the charts, is a significantly bearish omen for the entire raw commodity sector. The yield on the benchmark U.S. 10-year Treasury note is 0.78% today.
There is important U.S. economic data due for release Thursday including the weekly jobless claims report, which is forecast to show a rise of around 780,000 claims. The advance third-quarter GDP estimate is forecast up a record 32% from the second quarter. Pending home sales for September are seen up 3.0%.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading, on an upside correction from Wednesday’s steep losses. Bulls have lost their near-term chart advantage as a big and bearish double-top reversal pattern has formed 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 early today. Today, shorter-term technical resistance comes in at the overnight high of 3,310.75 and then at 3,350.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,260.75 and then at 3,250.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are higher in early U.S. trading on a corrective bounce. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 11,296.00 and then at 11,400.00. On the downside, shorter-term support is seen at this week’s low of 11,123.75 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 near steady in early U.S. trading. Bulls are having a good week. More gain this week would suggest a market bottom is in place. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) neutral early today. Shorter-term technical resistance is seen at 174 16/32 and then at this week’s high of 174 29/32. Shorter-term support lies at the overnight low of 173 25/32 and then at 173 12/32. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are near steady in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 139.00.0 and then at this week’s high of 139.03.0. Shorter-term technical support lies at the overnight low of 138.22.0 and then at 138.18.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The December Euro currency futures are lower in early U.S. trading. Bulls are fading this week. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1769 and then at 1.1800. Shorter-term support is seen at 1.1702 and then at 1.1650. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are down and hit a 4.5-month low in early U.S. trading. Prices have seen a bearish downside “breakout” from a sideways trading range this week. 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 $37.00 and then at the overnight high of $37.76. Look for sell stops just below technical support at the overnight low of $35.76 and then at $35.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are lower again in early U.S. pre-market trading. Risk-off attitudes and profit taking from recent gains are hitting the grain futures. Grain market bulls still have the firm overall near-term technical advantage as price uptrends are still in place on the daily charts. However, the big breakdown in the crude oil market this week is a bearish omen for all raw commodity markets, including the grains.
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