Tuesday, October 17–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly weaker overnight, on corrective pullbacks from recent gains that have put many stock indexes at record or multi-year highs. U.S. stock indexes are narrowly mixed in early U.S. electronic trading. Focus so far this week is on corporate earnings reports.
Gold prices are solidly lower in pre-U.S.-session trading. The geopolitical scene has been quieter the past couple weeks and that’s allowed world risk appetite to uptick, which is bearish for safe-haven gold.
In overnight news, consumer prices in the U.K. hit a five-year high in September, at up 3.0%, year-on-year. That’s well above the Bank of England’s target inflation rate of 2.0% annual inflation. The BOE is expected to raise its interest rate slightly in November.
Meantime, the Euro zone reported its September consumer price index at up 0.4% from August and up 1.5%, year-on-year. Those numbers were right in line with market expectations.
Nymex crude prices are trading modestly up Tuesday morning and are just above $52.00 a barrel. The other key “outside market” sees the U.S. dollar index higher.
China on Wednesday starts its twice-a-decade Party Congress meetings, in which major economic and cultural planning initiatives are laid out for the next five years. Traders and investors will keep a close watch for any pronouncements coming out of those meetings.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, import and export prices, industrial production and capacity utilization, Treasury international capital data, and the NAHB housing market index.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly weaker in early U.S. trading. Prices Monday hit another contract and record high. The market is still way overbought and due for a decent downside correction soon. The 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 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 2,557.75 and then at 2,565.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,539.25 and then at 2,525.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are slightly down but did hit another contract and record high overnight. 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 above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the contract high of 6,125.00 and then at 6,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 6,098.00 and then at 6,075.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly higher 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 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 last week’s high of 154 5/32 and then at 154 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 19/32 and then at 153 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are steady in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above with the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 125.20.0 and then at last week’s high of 125 25.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.10.5 and then at 125.04.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at 93.500 and then at the October high of 94.100. Shorter-term support is seen at the overnight low of 93.135 and then at Monday’s low of 92.930. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the September high of $52.86 and then at $53.00. Look for sell stops just below technical support at Monday’s of $51.35 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures markets were weaker overnight. Recent price action still suggests the corn market does not have much downside potential. Soybean bulls have and uptrend in place to suggest sideways to higher price action in the near term. And wheat bears continue to struggle, but if corn and soybeans can rally, wheat will at least stabilize.