Monday, October 26–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down overnight. U.S. stock indexes are set to open the New York day session lower. Trader and investor attitudes are more downbeat to start the trading week, as the Covid-19 pandemic infections are on the rise in much of the world, including Europe and the U.S. Worries are increasing the new lockdowns are coming this winter, even though they may not be as extreme as seen last spring.
Recent Covid-19 stimulus package discussions between U.S. congressional Democrats and Republicans have failed to produce a deal, just a bit more than a week before the U.S. elections. That’s also a negative for the stock markets.
Major central bank monetary policy meetings this week see the Bank of Canada Wednesday, and European Central Bank and Bank of Japan both meeting Thursday. Deflation has become a bigger concern in Europe.
The important outside markets early today see the U.S. dollar index higher. Nymex crude oil prices are lower and trading around $39.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.81% today.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, new residential sales, and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls are fading as a big and bearish double-top reversal pattern could be forming 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 below the 9-day. The 9-day is above 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 3,446.25 and then at last Friday’s high of 3,562.50. Buy stops likely reside just above those levels. Downside support for active traders last week’s low of 3,402.50 and then at 3,375.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 11,640.00 and then at 11,750.00. On the downside, shorter-term support is seen at last week’s low of 11,511.00 and then at 11,400.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering after hitting a 4.5-month low last week. Bears are in near-term control. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 173 20/32 and then at 174 even. Shorter-term support lies at the overnight low of 172 22/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering after hitting a four-month low last week. 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 to bullish early today. Shorter-term resistance lies at the overnight high of 138.19.5 and then at 138.24.0. Shorter-term technical support lies at the overnight low of 138.11.0 and then at last week’s low of 138.05.0. 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. Bulls are still working on a price uptrend on the daily chart. 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 to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1872 and then at last week’s high of 1.1894. Shorter-term support is seen at Friday’s low of 1.1799 and then at 1.1773. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are lower and hit a three-week low in early U.S. trading. Bulls are fading. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $39.74 and then at $40.00. Look for sell stops just below technical support at the overnight low of $38.42 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are lower in early U.S. pre-market trading, on some profit taking from recent gains. Grain market bulls still have solid technical control amid strong uptrends in place on the charts. On tap today will be USDA weekly export inspections and weekly USDA crop progress data.
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