Friday, October 21–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to lower overnight. U.S. stock indexes are pointed to weaker openings when the New York day session begins. The marketplace late this week is focused on the march higher in U.S. Treasury yields. The U.S. 10-year note yield is presently fetching 4.278%, which is the highest level since 2008. The Federal Reserve is hellbent on taming problematic inflation and is willing to let the U.S. economy stall out to get the job done more quickly. This scenario is bearish for stocks, bonds and commodity markets, but bullish for the U.S. dollar.
The key outside markets today see the U.S. dollar index solidly higher. Nymex crude oil prices are slightly lower and trading around $84.25 a barrel.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bears have the firm overall near-term technical advantage amid a two-month-old price downtrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at 3,700.00 and then at this week’s high of 3,777.25. Support for active traders is seen at 3,600.00 and then at 3,550.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are slightly lower in early U.S. trading. Prices remain in a two-month-old downtrend on the daily bar chart. 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 neutral to bearish early today. Shorter-term technical resistance is seen at 11,200.00 and then at this week’s high of 11,431.75. On the downside, shorter-term support is seen at this week’s low of 10,713.00 and then at 10,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly lower in early U.S. trading and hit another contract low. Prices are in a 2.5-month-old downtrend on the daily bar chart. Bears have the solid 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 120 15/32 and then at 122 even. Shorter-term support lies at the overnight contract low of 119 7/32 and then at 118 even. Wyckoff’s Intra-Day Market Rating: 3.0
December U.S. T-Notes: Prices are lower and hit a contract low overnight. Prices are in a 2.5-month-old downtrend on the daily bar chart. Bears have the solid 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 bearish early today. Shorter-term resistance lies at the overnight high of 109.15.0 and then at 110.00.0. Shorter-term technical support lies at the overnight contract low of 109.03.5 and then at 109.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The December Euro currency futures are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a long-term downtrend on the daily bar chart. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of .9921 and then at 1.0000. Shorter-term support is seen at this week’s low of .9766 and then at .9700. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly higher in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $87.14 and then at $89.00. Look for sell stops just below technical support at the overnight low of $83.15 and then at $82.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were lower in overnight trading, on some higher risk aversion to end the trading week. Corn bulls have the slight overall near-term technical advantage. Wheat and soybean bears have the slight chart edge. Grains will continue to look to the outside markets for direction. Commercial hedge pressure and farmer selling are squelching corn and soybean bulls at present, as U.S. harvest of corn and beans is in full swing. Wheat appears to be in a follower’s role at present.
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