Tuesday, October 23–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly lower overnight as risk aversion has returned to the marketplace amid geopolitical tensions. China’s stock indexes were sharply down after good gains posted Monday. South Korea’s and Japan’s stock markets were also sharply lower. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. indexes are back near their October lows.
Gold prices are sporting good gains today on safe-haven demand.
The Turkish president went on television overnight to explain that the Saudi journalist that was killed in a Saudi consulate in Istanbul was brutally slain in a planned attack. The Saudi kingdom denies involvement in the murder. The U.S. and other Western nations are trying to get to the bottom of the matter, but President Trump has been cautious about the situation, what with the strong U.S. business ties to Saudi Arabia.
The China-U.S. trade showdown is negatively impacting China’s economy and weighing on Asia’s stock markets. Two U.S. warships are presently traveling near China and through the Taiwan Strait, to amplify tensions.
Thursday’s European Central Bank regular monetary policy meeting will be closely watched by the marketplace. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU. European stock markets are wobbly this week as the Italian government is scoffing at EU budget rules.
The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index weaker. Meantime, November Nymex crude oil prices are lower and trading just above $68.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, and the Richmond Fed business survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are solidly down in early U.S. trading, and back near the October low. Recent price action suggests that at least a near-term market top is in place, if not a major top. 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,757.50 and then at Monday’s high of 2,782.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the October low of 2,712.25 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 3.5
December Nasdaq index December futures: Prices are solidly lower in early U.S. trading. Recent price action suggests a near-term market top is in place, if not a major market top. 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 bearish early today. Shorter-term technical resistance is seen at 7,100.00 and then at the overnight high of 7,159.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,024.25 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher in early U.S. trading today, on safe-haven demand. Bears still have the firm overall near-term technical advantage as a two-month-old downtrend is in place on the daily chart, but now just barely. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 138 23/32 and then at 139 even. Buy stops likely reside just above those levels. Shorter-term support lies at 138 even and then at the overnight low of 137 22/32. 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, on safe-haven demand. Bears still have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart, but now just barely. 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 bullish early today. Shorter-term resistance lies at the overnight high of 118.13.5 and then at 118.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 117.31.0 and then at last week’s low of 117.25.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is even with 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 95.920 and then at 96.000. Shorter-term support is seen at Monday’s low of 95.205 and then at 95.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $69.66 and then at $70.00. Look for sell stops just below technical support at $68.00 and then at $67.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were mixed to firmer overnight. Bulls faded last week and are working to regain momentum this week. Market bottoms, or harvest lows, look to be in place for all three major grain markets, but the upside is limited 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