Friday, September 27–Jim Wyckoff’s Morning Markets Report
Asian stocks were mostly weaker, while European stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
Slowing global economic growth is in focus late this week. China reported its industrial profits dropped 2% in August, year-on-year. Producer price deflation also deepened in August. Other economic data released from the world’s second-largest economy Friday also showed China’s imports of raw commodities generally declining. The U.S.-China trade war has significantly crimped China’s economic growth.
Meantime, there was more dour economic news coming out of the European Union. The Euro zone September consumer confidence index was reported at minus 6.5 from minus 7.1 in August. Industrial confidence was reported at minus 8.8 in September from minus 5.8 in August.
The world marketplace is seeing risk appetite somewhat blunted by the U.S. House of Representatives considering impeaching President Trump. Whether Trump actually gets impeached seems unlikely at this time. However, the inquiry by the House is very likely to bog down the U.S. government to a standstill on new legislation, and is likely to hurt Trump’s foreign policy agenda.
Nymex crude oil prices are near steady and trading around $56.50 a barrel. The other key outside market today sees the U.S. dollar index trading modestly up and hitting a new high for the year.
U.S. economic data due for release Friday includes personal income and outlays, durable goods orders and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. Bulls have the overall near-term technical advantage. However, there is now very strong overhead resistance at the recent highs, scored in July and September. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 3,000.00 and then at this week’s high of 3,012.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,970.00 and then at this week’s low of 2,953.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are modestly up in early U.S. trading. Bulls have the overall 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 and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 7,842.75 and then at this week’s high of 7,904.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,753.50 and then at 7,700.00. Sell stops are likely located 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 lower 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 technical resistance is seen at the overnight high of 162 8/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at 161 even and then at this week’s low of 160 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower 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 to bearish early today. Shorter-term support lies at this week’s low of 129.18.5 and then at 129.12.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.08.5 and then at 131.13.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer and hit a new contract high 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 bullish early today. The dollar index finds shorter-term technical resistance at the contract high of 98.955 and then at 99.250. Shorter-term support is seen at the overnight low of 98.795 and then at 98.450. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S. trading. Bulls have faded badly recently and have lost their overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.62 and then at $57.00. Look for sell stops just below technical support at this week’s low of $55.41 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mixed in overnight trading. Corn was down 1 to 2 cents, soybeans down 1 to 2 cents and wheat around 3 cents higher. The wheat market is being supported by weather forecasts for cold and snow in the coming days in the northern US wheat regions. Selling interest in corn and soybeans is limited by Corn Belt weather forecasts calling for substantial rains over the next week that will curtail harvesting activity and could cause crop-quality problems. Grain market bulls late this week are somewhat encouraged by the more upbeat tone recently exhibited by both US and China trade officials, including reports that China is poised to buy more US ag products. However, the impeachment threat hanging over President Trump’s head at present is likely to weaken his foreign policy stature and could derail the US biofuel deal he is working on to prop up the US corn market. USDA will release its quarterly grain stocks report Monday. Average trade estimates are for around .98 billion bushels of US soybean stocks, 2.3 billion bushels of US wheat, and 2.4 billion bushels of corn. The corn and soybean stocks in this report could be some of the biggest on record. The strong US dollar on the foreign exchange market (the US dollar index hit a new high for the year on Friday) is an underlying negative for the US grains, making them more expensive on the world market. US grain exports have already been anemic and the strong greenback won’t help matters.
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