Tuesday, October 1–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed to mostly weaker overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. A Jewish holiday and China markets closed for a holiday today are making for a bit more subdued trading conditions.
Violence in Hong Kong has escalated on Tuesday, a national holiday in China. Reports said a protester was shot with a live round of ammunition amid the escalating civil unrest. This news has not had a major impact on world markets—at least not yet.
In other overnight news, the Euro zone manufacturing purchasing managers index (PMI) fell to its lowest level in seven years, at 45.6 in September from 47.0 in August. The German manufacturing PMI was even worse in September, at 41.7. A reading below 50.0 suggests contraction in the sector. The Euro currency continues to slump against the U.S. dollar.
Australia’s central bank on Tuesday cut its interest rate by 0.25%, to 0.75%.
The World Trade Organization said Tuesday global economies are set for their weakest trade growth rate in 2019 since the major financial crisis over ten years ago. The WTO said global trade will slow to 1.2% this year from a 3% growth rate in 2018. The WTO blamed the trade war between the U.S. and China for the slowdown in trade.
The U.S. dollar index is firmer and hit another contract high overnight. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are higher and trading around $54.50 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales report, the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, construction spending, the global manufacturing PMI, and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. Bulls have the overall near-term technical advantage. However, 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 3,000.00 and then at last week’s high of 3,012.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,964.50 and then at last week’s low of 2,946.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have the overall technical advantage. 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 the overnight high of 7,826.75 and then at 7,850.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,705.75 and then at last week’s low of 7,641.00. 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 solidly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are still 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 neutral to bearish early today. Shorter-term technical resistance is seen at 162 even and then at the overnight high of 162 18/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 19/32 and then at 160 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are solidly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are still 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 neutral to bearish early today. Shorter-term support lies at the overnight low of 129.20.0 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at 130.08.0. 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 firmer and hit a contract high in early U.S. trading. 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 bullish early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 99.235 and then at 99.500. Shorter-term support is seen at Monday’s low of 98.710 and then at 98.450. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
November Nymex crude oil prices are higher in early U.S. trading, on short covering. Bulls have faded 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 neutral early today. Look for buy stops to reside just above technical resistance at $55.00 and then at $56.00. Look for sell stops just below technical support at Monday’s low of $53.98 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were steady to weaker in overnight trading, on some mild consolidation following good gains scored Monday in the wake of a bullish USDA report. Corn was down around 2 cents, soybeans near steady and wheat around 3 to 5 cents lower. USDA’s quarterly grain stocks report showed US soybean stocks at .913 billion bushels versus around .98 billion bushels expected by traders and .438 billion bushels in stocks at this time last year. US wheat stocks were 2.385 billion bushels versus around 2.3 billion bushels forecast, and 2.39 billion bushels at this time in 2018. US corn stocks were reported at 2.114 billion bushels in Monday’s USDA report, compared to around 2.4 billion bushels expected by the trade and 2.14 billion bushels last year at this time. USDA weekly crop progress data out Monday afternoon showed the US corn condition rating at 57% good to excellent, which was expected. US corn harvest was 11% complete versus 14% expected. Soybean condition rating was 55% good to excellent, which was just above market expectations. US soybean harvest was 7% complete versus 6% expected. Winter wheat plantings were at 39% complete versus 36% expected. The very strong US dollar on the foreign exchange market (the US dollar index hit a new high for the year today) is an underlying negative for the US grains, making them more expensive on the world market.
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