Tuesday, October 29–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly weaker in quieter trading overnight, as the FOMC meets today. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The S&P 500 and Nasdaq indexes scored record highs on Monday. Trader and investor optimism remains elevated early this week amid reports from China and the U.S. that their Phase 1 part of a trade deal is nearly ready for signing.
It’s a very big U.S. economic data week, highlighted by the Federal Reserve’s Open Market Committee (FOMC) meeting that starts 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.
On Wednesday the gross domestic product report is out and on Friday comes the employment report from the Labor Department. Other key reports are also out this week.
The key “outside markets” find Nymex crude oil prices weaker in early U.S. trading today and trading around $55.00 a barrel. Meantime, the U.S. dollar index is higher.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P/Case-Shiller home price index, pending home sales, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly down in early U.S. trading after hitting a contract and record high on Tuesday. Price action Tuesday 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 3,042.75 and then at 3,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’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 slightly up in early U.S. trading and hit a new contract and record high on Monday. Bulls have the solid near-term technical advantage. Prices have 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 Monday’s low of 8,048.00 and then at 8,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have lost their overall near-term technical advantage and 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 Monday’s high of 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 6/32 and then at 158 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are 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 early today. Shorter-term support lies at the overnight low of 129.01.5 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.12.0 and then at Monday’s high of 129.18.5. 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 firmer in early U.S. trading. Bulls have stabilized the market and have some momentum early this week. 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 bullish early today. The dollar index finds shorter-term technical resistance at 97.845 and then at 98.000. Shorter-term support is seen at the overnight low of 97.510 and then at 97.340. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower in early U.S. trading. Bulls have early this week lost their momentum after prices hit a four-week high early Monday and have since sold off. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $55.88 and then at Monday’s high of $56.92. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mostly lower overnight. Corn was down around 1 1/2 cents, soybeans off around 2 1/2 cents and wheat near steady. US corn and soybean harvest progressed about as expected last week. USDA Monday afternoon reported US corn harvest at 41% complete, which was below expectations. Soybean harvest was pegged at 62% done, which was right in line with forecasts. US winter wheat planting was 85% complete as of Sunday, which was just below market expectations. Grain trader attitudes remain mostly upbeat regarding the US-China trade negotiations. President Trump said Monday the “Phase 1” part of the trade agreement could be signed ahead of schedule. However, the grain traders again on Monday saw tepid-at-best export demand for US grains on the world markets, as reported in the weekly USDA export inspections report. That export demand needs to pick up for the grain futures markets to see price uptrends continue.
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