Monday, October 2–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
The war of words between the U.S. and North Korea flared up again over the weekend. After the U.S. Secretary of State Rex Tillerson suggested there is some dialogue taking place with North Korea regarding its nuclear missiles, President Trump then tweeted “save your energy Rex.” So far, the world markets are not reacting strongly to the weekend developments on the geopolitical front.
As the month of October begins, the month of September turned out to be one of the least volatile months for the U.S. stock market in over 65 years.
Gold prices are lower and hit a six-week low overnight, once again pressured by an appreciating U.S. dollar on the foreign exchange market and little risk aversion in the marketplace at this time.
A shooting spree in Las Vegas late Sunday that left over 50 people dead and over 200 wounded is not believed to be a terrorist attack.
In other overnight news, the Spanish referendum on Catalonia splitting from Spain passed easily. This put some more downside pressure on the Euro currency.
The Euro zone September manufacturing purchasing managers index (PMI) was out overnight and came in at 58.1 versus the August reading of 57.4. A number of 58.2 was forecast. A PMI above 50.0 suggests growth in the sector.
The U.S. dollar index is solidly higher in early U.S trading Monday. Greenback bulls have momentum. A bullish head-and-shoulders bottom reversal pattern has formed on the daily bar chart for the USDX, which is a technical clue that a market bottom is in place.
The other key outside market on Monday morning sees Nymex crude oil futures lower. Prices last week hit a five-month high. While the oil bulls still have the overall near-term technical advantage, there are stiff chart resistance layers just above present price levels.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, construction spending, the ISM report on business, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly higher and hit a contract and record high in early U.S. trading. 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 overnight contract high of 2,523.50 and then at 2,535.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,510.00 and then at 2,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index December futures: Prices are firmer in early U.S. trading today. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the contract high of 6,025.75 and then at 6,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,982.25 and then at 5,950.00. 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. Prices are in a three-week-old downtrend on the daily bar chart. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 152 23/32 and then at 153 even. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 152 1/32 and then at 151 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are weaker and hit another 2.5-month low overnight. Bears have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. 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 125.10.0 and then at 125.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.30.0 and then at 124.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Greenback bulls have upside momentum. The shorter-term moving averages for the dollar index 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 93.495 and then at 93.750. Shorter-term support is seen at 93.000 and then at the overnight low of 93.390. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S. trading. Prices last week hit a five-month high. Bulls still have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $51.00 and then at the overnight high of $51.71. Look for sell stops just below technical support at $50.00 and then at $49.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were weaker overnight. The resiliency of the grain markets the past couple weeks has been impressive, which makes me suspect that harvest lows are in place and that prices will at least work sideways, if not sideways-to-higher, into the end of the year. But don’t look for big rallies right during the U.S. corn and soybean harvesting.