Tuesday, October 2–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly weaker overnight on some risk aversion that has crept back into the marketplace. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on some profit taking from recent gains that pushed prices to record highs. Chinese markets are closed until Friday for a public holiday.
Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. The Euro currency slumped and gold prices rallied overnight after a government official said Italy would be better off with its own currency. The European Union has to approve Italy’s budget plan that many are saying won’t pass muster with the EU. This matter appears to be escalating and could continue to pressure the Euro currency and provide more support to the safe-haven U.S. dollar and gold.
The marketplace is also refocusing on the U.S.-China trade war. Some market watchers now reckon that with the U.S. zipping up a trade pact with Mexico and Canada, it will be that much tougher on China’s economy, as some major companies’ executives will be re-examining their supply chains that heretofore have gone through China.
In other overnight news, the Euro zone got a hot inflation report. The producer price index was reported up 4.2% in August, year-on-year. The PPI was forecast at up 3.9%.
The key outside markets today find the U.S. dollar index higher as the greenback bulls have fresh power and momentum. Meantime, November Nymex crude oil prices hit a four-year high overnight are near steady and trading just above $75.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, and domestic auto industry sales. U.S. Federal Reserve Vice Chairman Randal Quarles also testifies to the Senate Banking Committee today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading on profit taking but are still not far below the recent contract and record highs. The bulls have the solid 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,930.00 and then at the contract high of 2,947.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,907.50 and then at 2,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index December futures: Prices are lower on profit taking after hitting a contract and record high on Monday. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-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 7,677.75 and then at the contract high of 7,728.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,630.25 and then at 7,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher in early U.S. trading today, on short covering. Bears still have the overall near-term technical advantage as a five-week-old downtrend is in place on the daily chart. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 140 16/32 and then at 141 even. Buy stops likely reside just above those levels. Shorter-term support lies at 140 even and then at the overnight low of 139 27/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering. Bears have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 118.29.5 and then at last week’s high of 119.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.19.5 and then at this week’s low of 118.16.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher and hit a six-week high in early U.S. trading. Bulls have regained good upside momentum and fresh technical power. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 95.500 and then at 95.750. Shorter-term support is seen at 95.000 and then at the overnight low of 94.895. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady and hit a contract high and four-year high overnight. The bulls have the solid overall near-term technical advantage. The shorter-term moving averages are 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight contract high of $75.91 and then at $77.00. Look for sell stops just below technical support at $75.00 and then at $74.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were again mixed overnight. Grain market bulls got some cheer with the new U.S.-Mexico-Canada trade agreement reached earlier this week. Still, the bears have the overall near-term technical advantage. But market bottoms again look to be in place for all three major grain markets. U.S. corn and soybean harvest pressure is moving along, but rains have slowed progress, which favors the bulls.
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