Thursday, September 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight, on hopes that a U.S. corporate tax-reform plan will boost economic growth not only in the U.S. but around the globe. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
Gold prices are slightly lower and hit a six-week low overnight. Better risk appetite in the marketplace this week, as well as a rallying U.S. dollar index, are bearish for the safe-haven metal.
World bond market yields are on the rise this week, on ideas that better world economic growth will prompt the major central banks to become less accommodative on their monetary policies. Odds are rising (now about 75%) that the Federal Reserve will raise U.S. interest rates in December.
In overnight news, the Euro zone economic sentiment indicator rose to 113.0 in September from 111.9 in August. The September reading was the highest in over 10 years. This report falls into the camp of the Euro zone monetary policy hawks. European Central Bank President Mario Draghi said Thursday the ECB will decide later this year specifically when to start winding down its quantitative easing of monetary policy (bond buying).
The U.S. dollar index is slightly higher and hit another five-week high overnight. A bullish head-and-shoulders bottom reversal pattern has formed on the daily bar chart for the USDX, which is a technical clue that a market bottom is in place. Meantime, the Euro currency hit another five-week low against the U.S. dollar overnight. There are chart clues the Euro has put in a near-term market top.
The other key outside market on Thursday morning sees Nymex crude oil futures higher and hit a five-month high overnight. The oil bulls have the firm near-term technical advantage and still have upside momentum. However, there are stiff chart resistance levels just overhead in the crude oil market.
U.S. economic data due for release Thursday includes the weekly jobless claims report, advance economic indicators, the second-quarter GDP report, third estimate, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly lower in early U.S. trading, on mild profit taking after hitting a contract and record high on Wednesday. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 2,509.25 and then at 2,525.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 2,493.00 and then at this week’s low of 2,485.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are slightly lower in early U.S. trading today. Shorter-term moving averages (4- 9-and 18-day) are still 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 this week’s high of 5,963.00 and then at 5,980.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,900.00 and then at Wednesday’s low of 5,886.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower and hit a two-month low in early U.S. trading. Bears have downside momentum. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 153 4/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 152 1/32 and then at 151 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 lower and hit a 2.5-month low in early U.S. trading. Bears have downside momentum. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 125.12.0 and then at the overnight high of 125.17.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.02.0 and then at 125.00.0. 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 lower after hitting a six-week high overnight. Greenback bulls still have some upside momentum. 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 to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 93.495 and then at 93.750. Shorter-term support is seen at Wednesday’s low of 92.810 and then at 92.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are higher and hit a five-month high in early U.S. trading. Bulls have the firm overall near-term technical advantage. 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 the overnight low of $51.86 and then at $51.43. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures markets were weaker again overnight. Traders will closely examine today’s weekly USDA export sales report. The strong U.S. dollar is working against the grain bulls this week. Also, U.S. harvest is picking up speed rapidly and will in full swing by the end of this week. Harvest hedge pressure will make it tough for corn and soybeans to make significant upside headway in the coming weeks.