Wednesday, November 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are headed for mixed openings when the New York day session begins. The U.S. mid-term elections proved pollsters wrong as there was no “Republican wave” of victories. It appears the Republicans will have a slight majority in the House of Representatives, but the Democrats appear to be keeping control of the Senate. However, several key races in both the House and Senate have not been decided, and which could still tip the scales. Still, if history proves correct, a divided Congress that cannot pass new legislation does favor the stock market bulls.
The marketplace is still buzzing about the turmoil in the crypto currency markets on Tuesday that spilled over into safe-haven buying in gold and sharply boosted the yellow metal’s and silver’s prices. The crypto exchange FTX suffered a major liquidity crisis and had to be absorbed by its bigger rival Binance. The cryptos are still a bit shaky Wednesday, in the aftermath of Tuesday’s jolt. The cryptos are just like other markets. When a crisis of confidence occurs, traders and investors all running for the exit door at the same time creates a severe liquidity crunch.
In other news, China’s inflation cooled in October. It’s consumer price index rose just 2.1%, year-on-year, compared to a rise of 2.8% in September. Rising Covid cases in China may further hobble the world’s second-largest economy.
The key outside markets today see the U.S. dollar index slightly firmer. Nymex crude oil prices are weaker and trading around $88.25 a barrel. Oil prices have slipped this week on worries of slowing demand from China, due to rising Covid cases there. The 10-year U.S. Treasury note is yielding 4.134%.
Traders are anxiously awaiting the next U.S. report inflation Thursday morning, with the release of the consumer price index report for October, which is expected to come in up 7.9%, year-on-year, compared to the 8.2% rise seen in the September report.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, monthly wholesale trade and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bears have the 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 below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,867.00 and then at 3,900.00. Support for active traders is seen at this week’s low of 3,738.25 and then at last week’s low of 3,704.25. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are near steady in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are 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 early today. Shorter-term technical resistance is seen at this week’s high of 11,231.25 and then at 11,400.00. On the downside, shorter-term support is seen at Tuesday’s low of 10,928.75 and then at this week’s low of 10,751.00. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are near steady in early U.S. trading. Prices are in a three-month-old downtrend on the daily bar chart. Bears have the solid overall technical advantage. 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 technical resistance is seen at 121 even and then at 122 even. Shorter-term support lies at this week’s low of 118 3/32 and then at the contract low of 117 19/32. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are near steady in early U.S. trading. Prices are in a three-month-old downtrend on the daily bar chart. Bears have the solid overall technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 110.16.0 and then at 110.24.0. Shorter-term technical support lies at 110.00.0 and then at 109.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The December Euro currency futures are weaker in early U.S. trading. Bears have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the October high of 1.0131 and then at 1.0200. Shorter-term support is seen at 1.0000 and then at this week’s low of .9948. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages are still 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $91.00 and then at this week’s high of $93.74. Look for sell stops just below technical support at $86.50 and then at $85.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures were mixed to weaker in quieter overnight trading. Corn bulls have the slight overall near-term technical advantage. Soybeans bulls also have the slight chart edge. Wheat bears have the near-term technical advantage. Seasonality studies are starting to favor the grain market bulls as the U.S. corn and soybean harvests wind down. Traders are looking ahead to this morning’s monthly USDA supply and demand 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