Wednesday, November 4–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight. U.S. stock indexes are also set to open the New York day session mixed. The U.S. presidential election is a cliffhanger, with President Trump once again performing much better than the polls were forecasting. It could be days before a final result is seen and a winner declared. Trump has already said he will challenge the results if he loses. Markets could remain in limbo and languish until a winner is declared. Meantime, the Republicans appear to have kept control of the U.S. Senate, while the Democrats kept control of the House of Representatives.
Gold prices are solidly lower at mid-week, amid the so-far orderly U.S. elections and despite no winner yet in the race for president. Despite the very tight presidential race that could take days, or longer, to determine a winner, traders and investors are presently not exhibiting keen risk aversion Wednesday. The marketplace was somewhat assuaged by the fact that so far there has been no major civil unrest in the U.S. streets.
In other overnight news, the Euro zone September producer price index rose 0.3% from August and was down 2.4%, year-on-year. There are still no signs on the horizon of problematic inflation in the major world economies, even though many economists and analysts have been predicting such will occur at some point.
It’s also a week in which the Federal Open Market Committee (FOMC) meets starting Wednesday morning and on Thursday afternoon issues a statement on U.S. monetary policy. Fed Chairman Powell will also hold a press conference Thursday afternoon. No major changes in U.S. monetary policy are expected, but the marketplace will be looking for guidance on future actions from the Fed.
And on Friday the U.S. employment situation report for October from the Labor Department is out. The key non-farm payrolls number is seen up 530,000 and the unemployment rate is seen at 7.7% versus 7.9% seen in September.
The important outside markets early today see the U.S. dollar index slightly up. Nymex crude oil prices are higher early today and presently trading around $38.50 a barrel. Crude oil has seen a strong rebound after hitting a five-month low Monday. The yield on the benchmark U.S. 10-year Treasury note is 0.78% today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the U.S. services PMI, the ISM report on business services, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 3,400.00 and then at the overnight high of 3,432.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,350.00 and then at the overnight low of 3,319.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are still 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 bullish early today. Shorter-term technical resistance is seen 11,600.00 and then at the overnight high of 11,768.50. On the downside, shorter-term support is seen at 11,350.00 and then at the overnight low of 11,230.25. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are sharply higher in early U.S. trading, and in a massive daily trading range, after hitting a contract low overnight. Prices today have scored a big and bullish “key reversal” up, which is a solid clue that a market bottom is now in place. Shorter-term moving averages (4- 9- 18-day) are still 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) bullish early today. Shorter-term technical resistance is seen at the overnight high of 174 28/32 and then at 175 even. Shorter-term support lies at 173 even and then at 172 even. Wyckoff’s Intra-Day Market Rating: 7.0
December U.S. T-Notes: Prices are solidly higher after hitting a five-month low in early U.S. trading. Prices are scoring a big and bullish “outside day” up on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are still 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 bullish early today. Shorter-term resistance lies at the overnight high of 138.30.0 and then at last week’s high of 139.03.0. Shorter-term technical support lies at 138.16.0 and then at 138.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
EURO CURRENCY
The December Euro currency futures are steady in early U.S. trading after hitting a 3.5-month low overnight. The shorter-term moving averages for the Euro are still 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 for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1782 and then at 1.1800. Shorter-term support is seen at 1.1650 and then at the overnight low of 1.1612. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are higher in early U.S. trading and have made a very strong recovery from Monday’s low of $33.64, to suggest a near-term market bottom is in place. The shorter-term moving averages are still 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 bullish early today. Look for buy stops to reside just above technical resistance at $39.00 and then at $40.00. Look for sell stops just below technical support at $38.00 and then at the overnight low of $37.26. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures are mixed in early U.S. pre-market trading. Like most other markets at mid-week, the grains are pausing to see how the U.S. presidential election turns out. The grain market bulls still have the firm overall near-term technical advantage amid price uptrends in place in all three markets.
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