Friday, September 25–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to mostly weaker overnight. U.S. stock indexes are set to open the New York day session lower and also set to score a fourth week in a row of declines. Risk aversion remains keener to end the trading week. “As we go into the fourth quarter, risks are starting to pile up,” said one analyst. Covid-19 cases are on the rise in many major industrialized countries, with no proven vaccine on the horizon. Questions about the U.S. presidential election and the smooth transfer of power if President Trump loses the electoral college vote count also are unsettling to traders and investors. Heightened trade and political tensions between the world’s two largest economies—the U.S. and China—are also dampening marketplace attitudes.
U.S. House of Representative Democrats are pushing a revised and smaller stimulus package for Americans and U.S. businesses, but Republicans say they doubt any deal before election day will occur.
Gold and silver bulls have been perplexed this week by their metals’ prices plunging despite the keener trader and investor anxiety that history suggests should support the precious metals markets. One FXTM analyst in this morning’s email dispatch laid out this bullish scenario: “Gold prices (are) likely to rise again as debt markets struggle with new issuance. Demand for debt in Southeast Asian markets falls (Bloomberg). If corporates and governments are not able to borrow then new equity will need to be raised. If governments are not able to issue more debt, then more cash may be printed or interest rates raised. Raising interest rates is not good for economic development and printing cash is normally viewed as inflationary. Either way gold prices look likely to rise.” Many market watchers would argue this thesis is an outlier.
The important outside markets early today see the U.S. dollar index up and near this week’s two-month high. Nymex crude oil prices are near steady and trading around $40.30. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.66% today.
U.S. economic data due for release Friday is light and includes durable goods orders.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading and set to close at a technically bearish weekly low close and at a seven-week low close. Prices are trending lower on the daily chart. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,258.75 and then at 3,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,198.00 and then at 3,175.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. Prices are trending down on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below 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 the overnight high of 10,976.50 and then at 11,100.00. On the downside, shorter-term support is seen at this week’s low of 10,660.25 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 modestly firmer in early U.S. trading but poised for a technically bullish weekly high close. Bulls were working on a near-term price uptrend. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 177 14/32 and then at 178 even. Shorter-term support lies at the overnight low of 176 20/32 and then at 176 even. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are firmer in early U.S. trading and poised for a bullish weekly high close. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at last week’s high of 139.24.0 and then at the September high of 139.29.0. Shorter-term technical support lies at last week’s low of 139.10.5 and then at 139.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The December Euro currency futures are lower in early U.S. trading, near this week’s two-month low and poised for a technically bearish weekly low close today. Bulls are fading fast as prices are trending lower. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance the overnight high of 1.1650 and then at 1.1706. Shorter-term support is seen at this week’s low of 1.1645 and then at 1.1600. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower 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 above 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 the overnight high of $40.64 and then at $41.00. Look for sell stops just below technical support at this week’s low of $38.87 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are mixed to lower in early U.S. pre-market trading. Bulls have faded a bit this week but still have the overall near-term technical advantage in all three markets. A strong U.S. dollar and wilting raw commodity sector, overall, are weighing on the grains. Focus remains on U.S. harvest results, which are coming in better than expected, and export demand, as many wonder how long China will continue its buying binge, as seen in the daily USDA export sales announcements. There were none on Thursday—the first no-show by China in over two weeks.
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