Wednesday, November 14–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight. Asian shares were mixed to firmer and European stock indexes were mostly lower. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
The big drop in crude oil prices has spooked the world marketplace. Nymex crude oil futures prices are near steady today, after careening to an 11-month low of $54.75 a barrel on Tuesday. In less than six weeks’ time Nymex crude prices have dropped by over $20 a barrel. The steep slide in oil prices is a bearish element for most of the raw commodity sector, as oil is arguably the leader of that sector.
European investors are unsettled at mid-week. Reports said U.K. Prime Minister Theresa May has told her cabinet members to back her on her Brexit agenda, or quit. The Euro currency fell to a 16-month low against the U.S. dollar on Monday. Italian bond yields rose to a three-week high today as the Italian government and EU officials wrangle over the specifics of Italy’s budget.
In other overnight news, China’s industrial output was reported up a better-than-expected 5.9% in October, year-on-year. However, China’s retail sales rose by 8.6% in October, which is down from a 9.2% pace in September, year-on-year.
Germany’s gross domestic product shrank 0.8% in the third quarter, for the slowest pace of growth for the leading European Union economy in over five years. Meantime, the Euro zone GDP was reported up 0.2% in the third quarter, and up 1.7%, year-on-year, which was in line with market expectations.
The U.S. dollar index is trading firmer today and not far below this week’s 1.5-year high.
The U.S. economic highlight of the day will be the release of the Consumer Price Index for October, which is forecast to come in at up 0.3% from September.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the consumer price index. Fed Chairman Jerome Powell speaks at a Federal Reserve Board event in Dallas today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading. 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,743.75 and then at Tuesday’s high of 2,755.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,711.00 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index December futures: Prices are slightly lower and hit a two-week low in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 6,898.75 and then at 6,850.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,777.00 and then at 6,735.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer and hit a two-week high in early U.S. trading today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 139 even and then at 139 7/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 138 16/32 and then at 138 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 and hit a two-week high 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 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 the overnight high of 118.19.5 and then at 118.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.13.5 and then at Tuesday’s low of 118.07.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.530 and then at 97.750. Shorter-term support is seen at this week’s low of 96.800 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady after hitting an 11-month low on Tuesday. Bears are in solid near-term technical control. There are still no early clues that a market bottom is close at hand, even though the market is short-term oversold and due for a corrective upside bounce very soon. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.49 and then at $57.00. Look for sell stops just below technical support at Wednesday’s low of $54.75 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were modestly higher overnight, on short covering. The recent big gains in the U.S. dollar and big losses in crude oil are limiting buying interest in the grains. The grain market bears have the overall 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