Friday, September 24–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are also pointed to lower openings when the New York day session begins. There is some keener risk aversion to end the trading week, as the Chinese property giant Evergrande may have missed its $83 million debt payment that was due Thursday. There was no announcement the payment had been made, so many traders and investors are taking that to mean no payment was made Thursday. There are worries one of the biggest companies in the world’s second-largest economy being on the verge of insolvency could have a contagion effect not only in China but around the globe. History shows that when a financial market contagion begins, it’s very hard to contain. Mainly, it’s a crisis of confidence as traders and investors seek to pull their money out of riskier assets, and then the exit doors become clogged.
Also, it appears the marketplace is taking Wednesday’s FOMC meeting results, including Fed Chairman Powell’s comments at his press conference, to be more hawkish on U.S. monetary policy than at first reckoned. U.S. Treasury bond yields have risen the past two trading sessions, hitting the highest level since July. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.41%. Powell is set to speak at a virtual event, along with other Federal Reserve officials, at 10:00 a.m. EDT Friday.
Meantime, the U.S. Congress is debating about how to extend the U.S. debt ceiling. Treasury Secretary Janet Yellen said the government will run out of money sometime in October. While looming over the marketplace, this situation has played out more than once over recent years, but it could still inject some anxiety into the marketplace, if the government actually nears a shutdown.
In other overnight news, China’s central bank declared all crypto-currency transactions to be illegal. China officials said the move was made to maintain national security and social stability. Bitcoin prices are down on the news.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil futures prices are near steady and trading around $73.35 a barrel
U.S. economic data due for release Friday is light and includes new residential sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are a bit weaker in early U.S. trading. The 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 is below 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 4,455.00 and then at 4,480.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Thursday’s low of 4,385.75 and then at 4,350.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. Bulls have the overall chart advantage. 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 15,347.00 and then at 15,500.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 15,100.00 and then at 15,000.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are near steady in early U.S. trading. Bulls have the firm overall near-term technical advantage but trading has been choppy and sideways at higher levels. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 163 even and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 161 10/32 and then at 161 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are near steady in early U.S. trading. 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 resistance lies at 132.16.0 and then at 132.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.03.0 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The December Euro currency futures are slightly lower in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are 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 to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1775 and then at 1.1800. Buy stops likely reside just above those levels. Shorter-term support is seen at the this week’s low of 1.1701 and then at the August low of 1.1690. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are near steady and hit a six-week high overnight. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $73.66 and then at $74.00. Look for sell stops just below technical support at $72.00 and then at $71.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were lower overnight, amid keener risk aversion to end the trading week. Look for the grains to continue to be more impacted by outside market forces—namely global stock markets–for the near term. The corn and soybean market bears still have the near-term technical advantage, while the wheat bulls are showing resilience and have the slight near-term technical advantage.
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