Tuesday, September 17–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is still keen in the marketplace Tuesday, following the weekend terrorist drone attacks on Saudi Arabian oil installations. The U.S. says the attacks were launched by Iran. The attack was the biggest hit to global crude oil production in modern history. Now, the world awaits the response from the U.S. It seems unlikely President Trump will let Iran get way with the attack without serious U.S. military impunity. U.S. officials are headed to Saudi Arabia to confer with the Kingdom.
Gold prices were weaker overnight after a moderate rally on Monday on safe-haven demand.
The other big markets event taking place this week is the meeting of the Federal Reserve’s Open Market Committee (FOMC) that begins Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the FOMC will lower U.S. interest rates by 0.25%. President Trump has been brow-beating the Fed recently to get on the stick and lower interest rates, to make the U.S. more competitive with other nations on trade. The spike up in oil prices this week may throw a monkey wrench into central banks’ monetary policies, which had heretofore been leaning very easy. Sharply higher oil prices immediately raise the specter of rising inflation, which could hamstring central banks’ monetary policy easing in efforts to jumpstart or sustain their economic growth.
The marketplace was somewhat disappointed China’s central bank did not move more aggressively to ease its monetary policy Tuesday, following some weak economic data the country released this week. However, China’s central bank could soon follow any U.S. rate cut with one of its own.
Nymex crude oil prices are weaker and trading around $62.00 a barrel. The other key outside market today sees the U.S. dollar index slightly up.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, industrial production and capacity utilization, and the NAHB housing market index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,007.00 and then at last week’s high of 3,025.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,983.50 and then at 2,973.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are modestly lower in early U.S. trading. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,898.50 and then at 7,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,798.25 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer in early U.S. trading. Still, bulls have faded badly recently. 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 neutral to bullish early today. Shorter-term technical resistance is seen at Monday’s high of 159 15/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 20/32 and then at Monday’s low of 157 30/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are still 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 128.31.0 and then at Monday’s low of 128.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.09.0 and then at 129.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
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 neutral early today, as the 4-day is even with 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 the overnight high of 98.290 and then at 98.500. Shorter-term support is seen at 98.000 and then at last week’s low of 97.560. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
October Nymex crude oil prices are lower in early U.S. trading, on a normal corrective pullback after spiking to a nearly four-month high of $63.38 Monday. Bulls have the firm overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $62.59 and then at $63.38. Look for sell stops just below technical support at $61.00 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were lower in overnight trading. Corn was down around 4 cents, soybeans off around 6 cents and wheat about 4 to 6 cents lower. Some downside corrective pressure is seen early Tuesday following recent gains. The weekly USDA crop progress reports, out late Monday, also showed corn and soybean conditions a stable to a bit better than expected, which is getting a mildly bearish read. The US corn condition rating was 55% good to excellent, the same as last week. The soybean condition rating was at 54% good to excellent versus 55% GTE last week. Geopolitical uncertainty in the marketplace this week, following the terrorist drone strikes against Saudi Arabia over the weekend, and the potential for retaliation from the Saudis and the U.S. against Iran, are also keeping the grain market bulls at bay. Weather in the US Corn Belt remains very warm. It appears the corn and soybean crops will escape a killing hard frost early this fall. Traders will closely monitor the daily USDA reporting service for any new grain purchases coming from China. China has been buying US soybeans recently.
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