Wednesday, September 27–Jim Wyckoff’s morning markets report
In overnight news, China got some upbeat economic news. Industrial production in August saw the first increase in more than a year, reflecting higher output and slower producer price deflation. The report suggests potential stabilization in the world’s second-largest economy. Meantime, China property developer Evergrande’s top official is reported to be under police control.
In other news, Australia’s consumer price inflation up-ticked in August, coming in at up 5.2%, year-on-year versus a rise of 4.9% in July.
The key outside markets today see the U.S. dollar index slightly higher and hit another 6.5-month high overnight. Nymex crude oil prices are higher and trading around $92.00 a barrel. A Wall Street Journal headline today reads: “Quiet Western drills set stage for $100 oil.” Meantime, the benchmark U.S. Treasury 10-year note yield is presently near this week’s multi-year high and fetching 4.503%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders and the weekly DOE liquid energy stocks report.
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are up a bit in early U.S. trading. Bulls are fading as prices are in a two-month-old downtrend on the daily bar chart and hit a 3.5-month low Tuesday. 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 neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 4,383.50 and then at 4,400.00. Support for active traders is seen at this week’s low of 4,305.50 and then at 4,275.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly up in early U.S. trading. 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 14,955.75 and then at 15,149.00. On the downside, shorter-term support is seen at this week’s low of 14,666.25 and then at 14,500.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering after hitting a contract low Tuesday. 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 bullish early today. Shorter-term technical resistance is seen at 116 even and then at this week’s high of 117 even. Shorter-term support lies at the contract low of 114 10/32 and then at 114 even. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering after hitting a contract low Tuesday. 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 neutral to bullish early today. Shorter-term resistance lies at this week’s high of 108.25.5 and then at 109.00.0. Shorter-term technical support is seen at the contract low of 108.00.5 and then at 107.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are weaker in early U.S. trading and hit a 10-month low overnight. Prices are trending lower and bears are in solid near-term technical control. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at Tuesday’s high of 1.0647 and then at this week’s high of 1.0693. Shorter-term support is seen at 1.0550 and then at 1.0500. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November 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 the September high of $92.43 and then at $94.00. Look for sell stops just below technical support at the overnight low of $90.40 and then at this week’s low of $88.18. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
Grain futures prices were mixed to firmer in overnight trading. The keener risk aversion in the marketplace this week is limiting buying interest in the grain futures. Harvest pressure in soybeans and corn is in full swing. That is also a bearish seasonal factor due to commercial hedge pressure as farmers take their crops to the local elevators. Technicals remain fully bearish for corn and wheat, and moderately bearish for soybeans and meal.
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