Monday, November 2–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight, boosted by upbeat purchasing managers reports out of Asia and Europe. U.S. stock indexes are set to open the New York day session solidly higher. It’s a huge trading week as the U.S. election is Tuesday. Joe Biden has a sizeable lead over President Donald Trump in most polls. However, the polls were wrong in the last U.S. presidential election in 2016. Also, Covid-19 cases continue to rise in the U.S. and Europe, with the U.K. joining France in having to lock down many businesses. U.S. Covid-19 cases are hitting daily records. Still, overall trader and investor risk appetite is upbeat to start the first week of November. It could be that the market place is viewing the U.S. presidential election as win-win for the U.S. stock market–at least for the near term. A Biden victory would likely open up the spigots of massive government spending that would boost the U.S. economy. A Trump victory would keep corporate and individual taxes lower and keep in place business-friendly regulations that Trump put in place during his presidency.
In overnight news, the Euro zone October manufacturing purchasing managers index (PMI) came in at 54.8 versus 53.7 in September. A reading above 50.0 suggests growth in the sector. EU workhorse Germany’s manufacturing PMI was 58.2 in October. Meantime, China’s Caixin manufacturing PMI came in at 53.6 in October versus 53.0 in September, and at a multi-year high. China’s “official” manufacturing PMI, which is a more complete survey, showed a reading of 51.4 in October versus 51.5 in September.
The important outside markets early today see the U.S. dollar index a bit firmer. Nymex crude oil prices are lower early today and hit a five-month low overnight, and presently trading around $34.75 a barrel. Crude oil has been hit by demand concerns amid the renewed lockdowns in Europe that could be a precursor to the U.S. locking down more businesses. The breakdown in crude oil prices is a significantly bearish omen for the entire raw commodity sector. The yield on the benchmark U.S. 10-year Treasury note is 0.86% today.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM report on business and manufacturing, construction spending, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading, on some short covering and bargain hunting after hitting a five-week low Friday. The shorter-term moving averages (4-, 9- and 18-day) are still fully 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 3,350.00 and then at 3,370.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,275.00 and then at the overnight low of 3,243.25. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are solidly higher on short covering and bargain hunting after hitting a five-week low on Friday. Shorter-term moving averages (4- 9-and 18-day) are still fully 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 Friday’s high of 11,281.25 and then at 11,400.00. On the downside, shorter-term support is seen at 11,000.00 and then at last week’s low of 10,944.50. 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. 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) neutral early today. Shorter-term technical resistance is seen at the overnight high of 172 20/32 and then at 173 even. Shorter-term support lies at the overnight low of 171 31/32 and then at the October low of 171 22/32. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are slightly up 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 early today. Shorter-term resistance lies at the overnight high of 138.12.0 and then at 138.16.0. Shorter-term technical support lies at last week’s low of 138.03.5 and then at 138.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are slightly up in early U.S. trading and did hit a five-week low overnight. Bulls are fading. 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 belowe the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at 1.1700 and then at 1.1750. Shorter-term support is seen at the September low of 1.1630 and then at 1.1600. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower and hit a five-month low 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $35.28 and then at $36.00. Look for sell stops just below technical support at $34.00 and then at the overnight low of $33.64. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are lower in early U.S. pre-market trading. The tanking crude oil market and risk aversion in the commodity markets are hitting the grain futures. Profit taking and weak long liquidation are being featured in the grains. This argues for more sideways-to-lower trading in the near term. On tap today is the weekly USDA export inspections report.
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