Wednesday, September 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. The U.S. stock indexes are also pointed to gains when the New York day session begins. There is less risk aversion in the global marketplace at mid-week. The troubled Chinese property giant, Evergrande, is still on traders’ and investors’ minds, but many believe the situation will not turn into a worldwide contagion and that the Chinese government will not let Evergrande fail. The company said it would make its latest debt payments—at least one of them anyway. The marketplace will continue to keep a close eye on the matter. China’s markets reopened today after a public holiday, with the Chinese stock market a bit weaker but not showing any stress.
Meantime, today sees the conclusion of the U.S. Federal Reserve’ two-day monetary policy meeting (FOMC). The Wednesday afternoon FOMC statement and press conference from Fed Chairman Jerome Powell will be closely scrutinized, especially any wording on the timing of the Fed’s likely tapering its bond-buying program and also inflation prospects. Markets could see some increased volatility in the immediate aftermath of the FOMC statement and during Powell’s press conference.
Just over the horizon, the U.S. government is now grappling with extending the U.S. debt ceiling. Treasury Secretary Janet Yellen said the government will run out of money sometime in October. The marketplace has seen this situation play out in years past, and it could inject some anxiety into the marketplace if the government actually nears a shutdown.
The key outside markets today see the U.S. dollar index near steady. Nymex crude oil futures prices are higher and trading around $71.70 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.34%.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading, on a corrective bounce from this week’s selling pressure. A near-term price uptrend on the daily bar chart has been negated to suggest a near-term market top is in place. 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 to bullish early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 4,395.75 and then at this week’s high of 4,418.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,321.25 and then at this week’s low of 4,293.75. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher on a corrective rebound. Bulls have the overall chart advantage but have faded. A price uptrend on the daily bar chart is in jeopardy. 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 to bullish early today. Shorter-term technical resistance is seen at Tuesday’s high of 15,163.25 and then at this week’s high of 15,338.25. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 14,930.50 and then at this week’s low of 14,807.50. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 164 even and then at this week’s high of 164 6/32. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 163 6/32 and then at Monday’s low of 162 19/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading. 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 neutral to bearish early today. Shorter-term resistance lies at this week’s high of 133.11.5 and then at 133.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 132.30.5 and then at this week’s low of 132.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are slightly firmer in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at 1.1800 and then at 1.1850. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1719 and then at the August low of 1.1690. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $71.93 and then at the September high of $72.87. Look for sell stops just below technical support at the overnight low of $70.74 and then at this week’s low of $69.39. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures were higher overnight. Better risk sentiment at mid-week is helping to boost the grains. The corn and soybean market bears still have the near-term technical advantage, while the wheat bulls and bears are on a neutral playing field at present. If the stock and financial market turbulence resurfaces, buyers in the grains will again become very timid.
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