Monday, October 19–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session higher. Trader and investor risk appetite is more upbeat to start the trading week, on renewed hopes for an agreement between U.S. congressional Democrats and Republicans on a stimulus package for Americans. House Speaker Nancy Pelosi over the weekend set a Tuesday deadline for an agreement with the White House. President Trump said he is closer to Democrats’ demandsfor a larger overall package than congressional Republicans. The Senate Wednesday plans to vote again on a $500 billion coronavirus aid package.
There was also upbeat economic data coming out of China, as its economy in the third quarter grew by 4.9%, which was slower than expected but still considered a good recovery from the business lockdowns experienced earlier in the year. China remains the fastest-recovering major economy, after the lockdowns.
Reports said new legislation passed Saturday enables the Chinese government to restrict rare earth mineral exports to foreign companies and nations. China had already been using access to rare earth minerals and other materials to persuade companies to set up manufacturing in China. However, the passing of official legislation on the matter marks an escalation of the strategy to control critical commodity markets and gain the upper hand on Western manufacturing. The legislation also applies to advanced technologies required by manufacturers such as LEDs, where China dominates global supply. The new law takes effect December 1.
The important outside markets early today see the U.S. dollar index lower. Nymex crude oil prices are modestly lower and trading around $40.60 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.78% today.
U.S. economic data due for release Monday is light and includes the NAHB housing market index. Fed Chairman Powell also speaks today at an International Monetary Fund forum.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above 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 Friday’s high of 3,508.50 and then at 3,524.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Friday’s low of 3,461.25 and then at last week’s low of 3,431.50. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Friday’s high of 12,022.00 and then at 12,100.00. On the downside, shorter-term support is seen at the overnight low of 11,816.75 and then at last week’s low of 11,687.75. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 174 27/32 and then at 175 even. Shorter-term support lies at 174 even and then at the October low of 173 11/32. Wyckoff’s Intra-Day Market Rating: 4.0
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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 139.00.0 and then at 139.07.5. Shorter-term technical support lies at the overnight low of the October low of 138.22.5 and then at 138.18.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are higher in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at 1.1800 and then at the October high of 1.1847. Shorter-term support is seen at 1.1750 and then at last week’s low of 1.1702. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
November Nymex crude oil prices are a bit weaker in early U.S. trading. Price action has turned choppy and sideways. 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 early today. Look for buy stops to reside just above technical resistance at last week’s high of $41.29 and then at the October high of $41.47. Look for sell stops just below technical support at $40.00 and then at last week’s low of $39.04. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are higher in early U.S. pre-market trading. Grain market bulls remain in solid technical control. Bullish speculators continue to be lured into the grain futures markets. There are no early clues to suggest that market tops are close at hand. 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