Tuesday, October 10–Jim Wyckoff’s morning markets report
The marketplace is keenly focused on the Middle East as Israel has declared war on Hamas. Many veteran market watchers, including this one, have been surprised the marketplace has not reacted more strongly to the major geopolitical crisis. The Wall Street Journal reported financial markets reacted more strongly to last Friday’s U.S. jobs report than they did to the weekend violence in the Middle East that for Israel was the worst in 50 years. One respected CNBC commentator summed it up by saying at present the marketplace is not factoring in a further escalation in the Israel-Hamas conflict, meaning no other countries like Iran, Syria or the U.S. will become significantly involved. Many times when unexpected market shocks like this one occur, traders and investors quickly factor into market prices a worst-case outcome, on a knee-jerk reaction. Then, as the worst-case scenario does not play out, market prices begin to retrace their initial big moves. Not the case this time. This veteran market watcher finds it unlikely the Israel-Hamas war will not significantly involve any of the aforementioned countries, which would mean a significant escalation in the conflict. To put in simply: This matter will very likely get worse before it gets better. Beware traders and investors.
The key outside markets today see the U.S. dollar index modestly lower. Nymex crude oil prices are near steady and trading around $86.25 a barrel. The yield on the benchmark U.S. Treasury 10-year note yield is presently fetching 4.67%. The yield has down-ticked a bit early this week on flight-to-quality buying amid the Middle East turmoil.
U.S. economic data due for release Tuesday includes the NFIB small business index, the Johnson Redbook retail sales report and monthly wholesale trade.
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and hit a two-week high. A 2.5-month-old downtrend on the daily bar chart has been negated. The 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 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 4,400.00 and then at 4,450.00. Support for active traders is seen at 4,330.00 and then at 4,300.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly higher and hit a three-week high 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 and 18-day. The 9-day is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 15,300.00 and then at 15,500.00. On the downside, shorter-term support is seen at 15,100.00 and then at 15,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are weaker in early U.S. trading and not far above last Friday’s contract low. 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 early today. Shorter-term technical resistance is seen at the overnight high of 112 15/32 and then at 113 even. Shorter-term support lies at this week’s low of 110 11/32 and then at 110 even. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S. trading. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 107.30.5 and then at 108.10.0. Shorter-term technical support is seen at this week’s low of 107.02.05 and then at 106.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
The December Euro currency futures are firmer in early U.S. trading. Prices are still trending lower and bears are in solid overall near-term technical control. The shorter-term moving averages for the Euro 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 for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.0650 and then at 1.0700. Shorter-term support is seen at this week’s low of 1.0551 and then at 1.0500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $87.24 and then at $88.00. Look for sell stops just below technical support at this week’s low of $84.67 and then at $83.00. Wyckoff’s Intra-Day Market Rating: 4.5
Grain futures prices were lower in overnight trading. Keener risk aversion in the marketplace this week is bearish for the grains. Harvesting of soybeans and corn is in full swing and that is also a bearish seasonal factor amid commercial hedge selling. Technicals are bearish for corn, wheat and soybeans. On tap today is the weekly USDA export inspections report and the weekly USDA crop progress reports.
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.