Thursday, October 3–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were near steady to weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. China markets are closed this week for a holiday.
There are still global economic growth and trade worries hanging over the world marketplace after some dour manufacturing data coming out of the U.S. and European Union earlier this week. There will be a batch of manufacturing reports coming out of the U.S. Thursday that will be very closely scrutinized as U.S. economic recession worries have resurfaced.
A World Trade Organization trade-dispute decision in favor of the U.S. over the European Union on aircraft has rattled European markets, as the U.S. then announced late Wednesday it will levy new import tariffs on EU products coming into the U.S.
In another sign of very low and even worrisomely low inflation in most of the world’s major economies, the Euro zone today reported its August producer price index down 0.5% from July and down 0.8%, year-on-year.
Traders are also awaiting Friday’s morning’s employment situation report for September from the U.S. Labor Department. Friday’s key non-farm payrolls number is forecast to be up 145,000 in September.
The U.S. dollar index is higher in early U.S. trading. The USDX hit a contract and two-year high earlier this week. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are slightly lower and trading around $52.50 a barrel. Oil prices are in a steep slide from the spike high scored in September.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. services PMI, the global services PMI, manufacturers’ shipments and inventories, and the non-ISM manufacturing report on business.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer on a corrective bounce after hitting a five-week low Wednesday. Bulls are fading and it appears the index has topped out. There is very strong overhead resistance at the recent highs, scored in July and September. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 2,900.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,874.00 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are firmer on a bounce after hitting a five-week low Wednesday. Bulls are fading to start the month of October and it appears this index has put in a peak. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 7,600.00 and then at 7,641.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,525.50 and then at 7,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are up and hit a three-week high in early U.S. trading. Bulls have momentum amid safe-haven demand and ideas of slowing world economic growth. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 163 29/32 and then at 164 even, Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 163 7/32 and then at 163 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 and hit a three-week high in early U.S. trading, on safe-haven demand. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at 131.00.0 and then at 130.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 131.10.0 and then at 131.16.0. 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 modestly up in early U.S. trading. Prices Tuesday hit a contract and two-year high. Bulls have the solid overall near-term technical advantage. More upside is likely in the near term. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 99.000 and then at the contract high of 99.305. Shorter-term support is seen at this week’s low of 98.620 and then at 98.450. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly lower in early U.S. trading. Prices Wednesday hit a nearly two-month low. Bulls have faded badly recently. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 $53.00 and then at $54.00. Look for sell stops just below technical support at this week’s low of $52.17 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were weaker in overnight trading, on some more consolidation following good gains scored earlier this week, and on fresh trade war worries. Corn was down around 1 cent, soybeans down 1 cent and wheat around 1 to 3 cents lower. Weather in the US Midwest leans more toward the bullish camp, as heavy rains hit parts of the Corn Belt this week, delaying harvesting of the corn and soybean crops and causing some concerns about quality. In wheat, a major snowstorm in the northern US plains and Canadian prairies has damaged the spring wheat crops in those regions. Traders will closely examine this morning’s weekly USDA export sales report, and especially be watching for any new purchases from China.
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