Wednesday, November 7–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed to firmer overnight, with European shares mostly up and Asian shares narrowly mixed. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins.
Tuesday’s U.S. mid-term elections turned out as many had expected and saw the Republicans maintain control of the Senate but the Democrats gained control of the House of Representatives. The world marketplace appears comfortable with a split U.S. Congress and likely gridlock on major new legislation over the next two years.
Many believed the U.S. elections were a referendum on the performance of President Trump. Many would argue the U.S. elections did not turn out too bad for Trump, noting that history shows the party not in control typically fares better in mid-term elections.
The U.S. dollar is taking a hit following the elections. There are now notions any new Trump fiscal policy proposals that would be pro-growth and pro-business will get mired down in Congress and die.
Today the Federal Reserve’s Open Market Committee (FOMC) meets for a two-day meeting to discuss U.S. monetary policy, with a statement due Thursday afternoon. No change in interest rates is expected at this meeting. As always, traders will scrutinize wording of the FOMC statement and Chairman Jay Powell’s remarks at his press conference, for clues on the future direction and timing of U.S. monetary policy.
The other key “outside market” today finds Nymex crude oil prices higher and trading around $62.50 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report and consumer installment credit.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are solidly up and hit a three-week high in early U.S. trading. 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,787.00 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,760.00 and then at the overnight low of 2,744.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index December futures: Prices are solidly higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,122.25 and then at last week’s high of 7,143.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,000.00 and then at the overnight low of 6,971.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher in early U.S. trading today after hitting a four-week low overnight. Bears have the firm overall near-term technical advantage. 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 the overnight high of 138 3/32 and then at 138 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 137 even and then at the overnight low of 136 24/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are slightly up in early U.S. trading after hitting a four-week low overnight. 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 resistance lies at the overnight high of 118.08.5 and then at 118.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 117.23.0 and then at the October low of 117.13.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is sharply lower and hit a two-week low in early U.S. trading today. Bulls still have the overall near-term technical advantage but are fading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 96.000 and then at the overnight high of 96.285. Shorter-term support is seen at the overnight low of 95.485 and then at 95.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are higher in early U.S. trading, on short covering from recent solid selling pressure that pushed prices to a nearly seven-month low on Tuesday. Bears are still in firm near-term technical control. 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 bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $64.14 and then at $65.00. Look for sell stops just below technical support at $62.00 and then at this week’s low of $61.31. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were narrowly mixed overnight. The grain market bears still have the overall near-term technical advantage. Traders are awaiting Thursday morning’s monthly USDA supply and demand report for direction.
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