Monday, October 8–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight, with steep losses seen in the Chinese stock market after it was closed last week for a public holiday. Chinese monetary officials during the weekend loosened monetary policy a bit more but that did not stop their stock market sell off.
World equities are still pressured by rising government bond yields that are pulling investor interest away from stocks. U.S. stock indexes are in very mature bull market runs that have many wondering if the end is near. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The U.S. government, including the Treasury bond cash market, is closed for the Columbus Day holiday today.
Risk-off attitudes to start the trading week are also being perpetuated by the new Italian anti-establishment government not falling into line with European Union rules on a budget.
The key outside markets today find the U.S. dollar index higher, on safe-haven demand. Meantime, November Nymex crude oil prices are lower on profit taking and trading around $73.50 a barrel.
U.S. economic data due for release Monday is light and includes the employment trends index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. The bulls have the overall near-term technical advantage, but Friday’s bearish weekly low close begins to hint a near-term market top is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at overnight high of 2,898.25 and then at Friday’s high of 2,915.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,873.25 and then at 2,860.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index December futures: Prices are lower in early U.S. trading. Bulls have the overall near-term technical advantage, but Friday’s bearish weekly low close begins to hint a near-term market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,453.25 and then at 7,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 7,347.00 and then at 7,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today and hit a contract low overnight. Bears have the solid overall near-term technical advantage as an accelerating six-week-old downtrend is in place on the daily chart. 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 technical resistance is seen at 138 even and then at 138 9/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight contract low of 136 21/32 and then at 136 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 firmer in early U.S. trading, on short covering after hitting a contract low overnight. Bears still have the solid overall near-term technical advantage. Prices are in an accelerating six-week-old downtrend on the daily bar chart. 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 resistance lies at 118.00.0 and then at 118.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight contract low of 117.13.5 and then at 117.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above 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 last week’s high of 95.780 and then at 96.000. Shorter-term support is seen at the overnight low of 95.260 and then at 95.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S. trading, on profit taking from recent gains. The bulls still have the firm overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-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 $74.00 and then at the overnight high of $74.58. Look for sell stops just below technical support at $73.00 and then at $72.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were lower overnight. Heavy rains in much of the U.S. Corn Belt recently and more in the coming days will delay corn and soybean harvest, and that will limit the downside in corn and beans. Market bottoms look to be in place for all three major grain markets.
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