Wednesday, October 30–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly weaker in trading overnight. U.S. stock indexes are pointed toward steady to slightly lower openings when the New York day session begins.
Focus of traders and investors today is squarely on the Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement. It’s widely expected the Fed will cut interest rates by 0.25%. What is not so clear is the glide path the Fed will issue on future monetary policy moves in this afternoon’s statement and the follow-up press conference from Fed Chairman Jerome Powell. Look for active trading in the markets, including the metals, in afternoon trading Wednesday following the FOMC statement.
Also on Wednesday morning the first estimate of third-quarter U.S. gross domestic product is out, and is seen at up 1.6% on an annual basis.
The U.S. ADP national employment report is also out Wednesday morning, expected to show a rise of 100,000 jobs in October. This report precedes the more important jobs report from the Labor Department out Friday morning.
In overnight news, the Euro zone issued its October economic sentiment indicator and it came in at the lowest level in 4.5 years.
The key “outside markets” find Nymex crude oil prices near steady in early U.S. trading today and trading around $55.50 a barrel. Meantime, the U.S. dollar index is slightly lower.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading after hitting a contract and record high on Tuesday. Price action this week also produced a bullish upside “breakout” above the recent highs. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above 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 the contract high of 3,046.25 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,022.75 and then at 3,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are near steady in early U.S. trading. Prices hit a contract and record high on Monday. Bulls have the solid near-term technical advantage. Prices have this week seen a bullish upside “breakout” above the recent highs. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-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 Monday’s contract high of 8,127.50 and then at 8,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,000.00 and then at 7,918.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are slightly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field but prices are trending lower. 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 technical resistance is seen at 159 even and then at this week’s high of 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 17/32 and then at this week’s low of 158 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly firmer in early U.S. trading. Bulls have faded this month. 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 support lies at the overnight low of 129.06.5 and then at this week’s low of 129.01.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 129.18.5 and then at 129.24.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is weaker in early U.S. trading. Bulls have recently stabilized the market. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below 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 97.700 and then at 98.000. Shorter-term support is seen at 97.250 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady in early U.S. trading. 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 bearish early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $55.91 and then at this week’s high of $56.92. Look for sell stops just below technical support at $55.00 and then at this week’s low of $54.61. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were mixed overnight. Corn was near steady, soybeans up around 2 cents and wheat down 2 to 3 cents. The feature in the US grain futures markets continues to be slow corn and soybean harvest progress that is bullish for prices. More rain, snow and cold weather is forecast for the US Midwest in the coming days, followed by cold weather for at least the next week. At mid-week, grain traders are giving a not so friendly read to the potential for a U.S.-China “Phase 1” trade agreement to be signed by next month. Reports out of China said that timetable may not happen. Traders will be closely watching Thursday morning’s USDA weekly export sales report for any big purchases from China, which President Trump says are coming. Still, traders want to see proof before pushing grain futures prices higher. The November 8 USDA monthly supply and demand (WASDE) report is on the horizon, and will be the major data point for the grain markets for the month of November. Most look for the government to reduce the overall size of the U.S. corn and soybean harvest due to the less-than-ideal fall weather.
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