Markets Quieter, Awaiting FOMC Meeting

Tuesday, October 31–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed to slightly weaker overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. U.S. indexes are at or near record highs. Many world stock markets are also at or near record or multi-year highs.

In overnight news, the Euro zone reported its third-quarter GDP at up 0.6% from the second quarter and up 2.5%, year-on-year. The consumer price index was up 1.4% in October versus up 1.5% in September. And the Euro zone jobless rate was at 8.9% in September versus 9.0% in August. All this economic data released Tuesday falls very slightly into the camp of the European Central Bank monetary policy doves.

The Bank of Japan held its regular monetary policy meeting Tuesday and left it unchanged, as expected. The BOJ did lower its price inflation forecasts and said it would keep its very easy monetary policy in place.

The Federal Reserve’s FOMC meeting begins Tuesday morning and ends Wednesday afternoon with a statement. No monetary policy changes are expected at this meeting, but as usual traders and investors will parse the FOMC statement at the end of the meeting. It’s expected the FOMC will slightly raise U.S. interest rates at the next meeting in December.

Friday brings the U.S. employment report for October. Also, the Bank of England holds its monetary policy meeting later this week.

The key “outside markets” on Tuesday morning find the U.S. dollar index slightly higher. The index last Friday hit a 3.5-month high. Meantime, Nymex crude oil futures prices are near steady and trading just above $54.00 a barrel. Oil prices last Friday hit a six-month high.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the employment cost index, the S&P/Case-Shiller home price index, the ISM Chicago business survey, and the consumer confidence index.

–Jim

U.S. STOCK INDEXES

S&P 500 December e-mini futures: Prices are firmer in early U.S. trading and near Friday’s contract and record high. Bulls have the solid overall near-term technical advantage and there are no strong, early technical clues that a market top is close at hand. The 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 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 the contract high of 2,580.75 and then at 2,590.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,557.50 and then at last week’s low of 2,541.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index December futures: Prices are higher in early U.S. trading and near the contract and record high set on Friday. Bulls have the solid 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the contract high of 6,225.75 and then at 6,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 6,202.25 and then at 6,175.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are weaker in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 early today. Shorter-term technical resistance is seen at the overnight high of 152 19/32 and then at 153 even. Buy stops likely reside just above those levels. Shorter-term support lies at 152 even and then at Monday’s low of 151 11/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

December U.S. T-Notes: Prices are slightly lower. Bears have the overall near-term technical advantage. 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 early today. Shorter-term resistance lies at the overnight high of 125.03.5 and then at 125.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 124.23.0 and then at 124.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The December U.S. dollar index is slightly higher in early U.S. trading. The greenback bulls are working on a seven-week-old uptrend on the daily bar chart. The shorter-term moving averages for the dollar index are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Monday’s high of 94.835 and then at last week’s high of 95.060. Shorter-term support is seen at Monday’s low of 94.325 and then at 94.100. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

December Nymex crude oil prices are near steady in early U.S. trading after hitting a six-month high on Monday. Bulls have the overall near-term technical advantage amid a near-term price uptrend being in place. Look for buy stops to reside just above technical resistance at Monday’s high of 54.46 and then at $55.00. Look for sell stops just below technical support at $53.11 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Grain futures markets were narrowly mixed overnight. Harvest progress in the U.S. Corn Belt has been good. Recent price action in the grains still hints at market bottoms in place.