Wednesday, September 18–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed in quieter trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. At mid-week the marketplace is not as anxious as earlier this week, in the wake of the weekend terrorist attack on Saudi oil installations. Still, traders and investors are wondering when “the next shoe will drop” on this matter.
The big U.S. economic event this week is the meeting of the Federal Reserve’s Open Market Committee (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the FOMC will lower U.S. interest rates by 0.25% today. Traders also hope they will get some forward guidance on U.S. monetary policy from Fed Chairman Powell’s press conference today. President Trump has been berating the Fed to more aggressively lower interest rates to make the U.S. more competitive with other nations on trade.
After a spike up in very short term lending rates on Tuesday, the overnight rates returned to normal levels Wednesday, after the Federal Reserve injected liquidity into the financial system. While some traders and institutions were rattled by the matter, the overall marketplace was not impacted.
Nymex crude oil prices are weaker and trading around $59.00 a barrel. Reports surfaced Tuesday that the damaged Saudi oil installations could be back on line sooner than expected.
The other key outside market today sees the U.S. dollar index trading up.
In overnight news, the Euro zone August consumer price index was reported up 0.1% from July and up 1.0%, year-on-year.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above 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 3,008.75 and then at last week’s high of 3,025.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,983.50 and then at 2,973.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly lower in early U.S. trading. Bulls still have the solid overall technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at this week’s high of 7,921.50 and then at the September high of 8,002.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 7,850.75 and then at this week’s low of 7,798.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher again in early U.S. trading. Bulls are having a good week, so far. 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 bullish early today. Shorter-term technical resistance is seen at 160 16/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 10/32 and then at 159 even. 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. Shorter-term moving averages (4- 9- 18-day) are still 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 support lies at the overnight low of 129.07.5 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.24.0 and then at 129.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Bulls 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 even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 98.290 and then at 98.500. Shorter-term support is seen at the overnight low of 97.75 and then at last week’s low of 97.560. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are weaker in early U.S. trading. Bulls still have the overall near-term technical advantage. But it appears this week’s spike high is a peak, unless there is a military flare-up in the Middle East. Prices are in a five-week-old uptrend on the daily bar chart. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $59.43 and then at $60.00. Look for sell stops just below technical support at this week’s low of $58.46 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were higher in overnight trading. Corn was up around 2 cents, soybeans around 2 cents higher and wheat about 3 cents higher. Geopolitical tensions have eased just a bit at mid-week, which is prompting the bulls to step back into the grain futures markets as buyers. Traders are now reckoning “harvest lows” are in place for grain prices, amid US-China trade relations that appear to be improved the past week, including some fresh purchases of US soybeans from China. Weather in the US Corn Belt remains very warm, which is being read as neutral to bearish for the grains. There are no worries regarding a killing frost for the region. Traders are looking forward to getting anecdotal reports from farmers regarding corn and soybean yields, once their combines start rolling through their fields.
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