Friday, September 13–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly up overnight. Markets in China, South Korea and Taiwan were closed for a holiday Friday. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite remains upbeat late this week, due in part to reports Thursday President Trump may be interested in an interim trade deal with China. Both the U.S. and China this week have sounded more conciliatory in their ongoing trade war.
The markets are still digesting Thursday’s monetary policy meeting of the European Central Bank saw the bank significantly ease its monetary policy. The ECB lowered interest rates by 0.1%, to minus 0.5%, and also announced a new “quantitative easing” bond-buying program, which is the largest in over three years. The Federal Reserve’s FOMC meets next week and is expected to cut U.S. interest rates by 0.25%. Reports today said Japan may be looking to further stimulate its moribund economy.
The key “outside markets” today see Nymex crude oil prices near steady and trading around $55.15 a barrel. The U.S. dollar index is lower in early U.S. trading today.
U.S. economic data due for release Friday includes retail sales, import and export prices, manufacturing and trade inventories, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly higher and at a six-week high in early U.S. trading. 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 bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,032.25 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,012.00 and then at Thursday’s low of 3,001.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the solid overall technical advantage. 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 average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 8,002.50 and then at the contract high of 8,071.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,938.00 and then at 7,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a five-week low in early U.S. trading. Bears have downside momentum. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 160 7/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at 159 even and then at 158 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 weaker and hit a six-week low in overnight trading. Bears have momentum. 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 bearish early today. Shorter-term support lies at the overnight low of 129.08.5 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.21.5 and then at 129.28.0. 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 lower in early U.S. trading. Bulls still have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.995 and then at 98.275. Shorter-term support is seen at the overnight low of 97.560 and then at 97.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
October Nymex crude oil prices are near steady in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy trading. The shorter-term moving averages are neutral early today as the 4-day is below 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 $56.00 and then at Thursday’s high of $56.34. Look for sell stops just below technical support at the overnight low of $54.44 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were higher in overnight trading, on follow-through strength from good gains posted Thursday. Corn was up around 2 1/2 cents, soybeans about 3 cents higher and wheat up around 5 cents. Grain market bulls are encouraged this week by conciliatory comments from China and the U.S. on their trade war. Reports from China Friday said U.S. soybeans would be excluded from future tariffs. With Thursday’s monthly USDA supply and demand report out of the way and with no major bearish surprises, trading psychology in the grain markets appears to be changing from very bearish to at least neutral, following the solid gains posted Thursday in US grain futures. Importantly, the big speculative “fund” traders in grain futures, who have been heavily short for weeks, appear to be bailing out of those short positions (short covering). If the funds continue to liquidate their shorts, which is now more likely, then grain prices would continue to move up and “harvest lows” would be in place. Weather in the US Midwest remains warm, rainy and non-threatening for the crops, including more of the same next week. That is keeping any talk of a killing frost in the Corn Belt squelched.
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