Wednesday, October 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed but mostly weaker overnight. The U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. Hopes for a U.S.-China trade deal, called Phase 1, are somewhat dimming at mid-week, along with investor and trader risk appetites, following last week’s meetings between the world’s two largest economies. No deal was signed last week and specifics of the Phase 1 agreement are missing.
In overnight news, the Euro zone consumer price index for September was up 0.2% from August and up 0.8%, year-on-year. Those numbers were about in line with market expectations and continue to show major world economies not battling inflation, but instead battling deflation.
The International Monetary Fund on Tuesday released a report that forecast global economic growth at 3% in 2019, down from a 3.2% growth rate forecast by the IMF in July. The IMF blamed global trade disputes for the slowing economic growth worldwide.
A feature in the markets this week is the strong rally in the British pound, which hit a four-month high Tuesday on ideas of a Brexit deal forthcoming, to avoid a no-deal Brexit. However, no formal agreement has been reached yet between the U.K. and the European Union. The pound was under some pressure Wednesday.
Nymex crude oil prices are firmer and trading around $53.00 a barrel today. The other key “outside market” sees the U.S. dollar index near steady in early U.S. trading.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, retail sales, the NAHB housing market index, manufacturing and trade inventories, Treasury international capital data, and the Federal Reserve’s beige book.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the firm overall near-term technical advantage but stiff resistance lies overhead. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,003.25 and then at the September high of 3,025.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,966.50 and then at this week’s low of 2,953.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are modestly down in early U.S. trading. Bulls still have the firm near-term technical advantage but stiff chart resistance lies just overhead. 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 early today. Shorter-term technical resistance is seen at this week’s high of 7,971.75 and then at the September high of 8,002.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 7,859.75 and then at this week’s low of 7,807.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Trading has turned choppy recently. Bulls still have the overall near-term technical advantage but are wobbly. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 161 even and then at this week’s high of 161 24/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 159 23/32 and then at 159 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 support lies at this week’s low of 129.22.5 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 130.17.5 and then at 130.26.0. 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 firmer in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading a bit. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 98.375 and then at 98.500. Shorter-term support is seen at the overnight low of 97.865 and then at 97.560. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-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 Tuesday’s high of $53.79 and then at this week’st high of $54.90. Look for sell stops just below technical support at this week’s low of $52.39 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices weaker overnight. Corn was down around 3 cents, soybeans off around 1 1/2 cents and wheat about 2 cents down. The USDA weekly crop progress report released Monday afternoon showed corn harvest at 22% complete, which was below expectations for 24% completed. Soybean harvest was at 26% complete versus 25% expected. Winter wheat plantings were at 65% complete compared to 66% expected. The September NOPA crush report, released Tuesday, showed sharply lower crushings, at 152.566 million bushels versus expectations for around 162 million bushels crushed. Soy oil stocks were higher than expected at 1.442 billion lbs. The USDA said Tuesday it is considering making revisions to the previous year’s US corn crop to their September quarterly grain stocks report. USDA weekly grain export inspections data released Tuesday showed tepid US corn exports, at 471,000 metric tons (MT), US soybean export inspections decent at 955,000 MT and US wheat exports in line with expectations at 463,000 MT. At mid-week grain traders continue to be concerned about the lack of specifics in the “Phase 1” trade deal between the U.S. and China that was reached last week—one that has yet to be signed. This is limiting buying interest in grain futures. Offsetting that bearish matter is concern that the major winter storm that hit the northern U.S. plains and Corn Belt last week damaged crops in the field and will further delay an already slow corn and soybean harvesting pace.
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