Monday, October 29–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed to mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. European stock indexes were mostly up, following news that the S&P Global Ratings agency on Friday did not downgrade Italy’s debt rating. China’s stock market suffered more losses Monday amid investor worries about the world’s second-largest economy.
U.S. stock indexes on Friday fell to six-month lows before posting rebounds on the day. Stock market bulls will be glad to get the historically turbulent month of October out of the say and hopefully get a “Santa Claus rally” this year.
In overnight news, German Chancellor Angela Merkel has announced she will step down as leader of her Christian Democratic party after disappointing election results. Europe market watchers say that’s a sign of Merkel’s decline in power in Germany and in the European Union.
The key outside markets today find the U.S. dollar index higher and hovering near Friday’s nine-week high. Meantime, November Nymex crude oil prices are weaker and trading around $67.50 a barrel.
The key U.S. economic data point of the week, if not the month, will be Friday’s November employment report from the Labor Department.
U.S. economic data due for release Monday includes personal income and outlays and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading, on a corrective bounce after hitting a six-month low on Friday. Recent price action still suggests that a market top is in place. Prices are in a steep three-week-old downtrend on the daily bar chart. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at 2,700.00 and then at 2,712.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,660.00 and then at 2,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index December futures: Prices are higher in early U.S. trading, on a corrective bounce after hitting a six-month low on Friday. Recent price action suggests a market top is in place. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 7,000.00 and then at 7,075.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,880.00 and then at 6,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower after hitting a three-week high overnight. A fledgling price uptrend is in place on the daily bar chart. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 139 28/32 and then at 140 even. Buy stops likely reside just above those levels. Shorter-term support lies at 139 even and then at Friday’s low of 138 28/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S. trading, on a corrective pullback from recent good gains. A fledgling uptrend is in place on the daily bar chart. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 119.00.0 and then at last week’s high of 119.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Friday’s low of 118.21.5 and then at 118.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly firmer after hitting a contract high on Friday. 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. 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 96.440 and then at Friday’s contract high of 96.620. Shorter-term support is seen at 96.000 and then at 95.665. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading. Recent strong selling pressure suggests this market has topped out. 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 the overnight high of $67.95 and then at $68.50. Look for sell stops just below technical support at the overnight low of $66.93 and then at last week’s low of $65.74. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were higher overnight on short covering. The grain market bears still have the overall near-term technical advantage, even though it still appears harvest lows are in place. The upside will continue to be limited in the next few weeks by big U.S. corn and soybean crops being harvested, and tepid world demand for U.S. wheat.
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