Thursday, November 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are headed for lower openings when the New York day session begins. Risk-off attitudes are keener in the marketplace late this week.
The Federal Reserve’s Open Market Committee (FOMC) statement Wednesday afternoon initially was viewed as less hawkish. The U.S. central bank raised its main Fed funds rate by 0.75%, to 4.0%, as expected. The FOMC statement said the Fed will take into consideration the health of the U.S. economy after its recent “cumulative tightening.” The markets initially read that statement as leaning less hawkish on U.S. monetary policy going forward. The U.S. dollar index sold off and U.S. Treasury yields dropped, while U.S. stock indexes and gold rallied. However, once Fed Chairman Powell started speaking at his press conference and took a still-hard line on the Fed’s intent to keep raising rates to stop problematic price inflation, the aforementioned markets promptly reversed course. “Powell dropped the hammer,” quipped one business TV anchor. Powell in his presser implied the Fed’s terminal interest rate may have to rise higher than earlier Fed expectations—likely above 5%–and stay at that higher level for longer. Notions of a Fed pivot on its aggressive monetary policy tightening were dashed at Powell’s presser. Read a Barron’s headline today: “Powell zigged when markets wanted a zag: expect higher rates for longer.”
The Bank of England is holding its regular monetary policy meeting Thursday and is expected to raise its main interest rate by 0.75%.
Focus will quickly turn to Friday’s monthly U.S. employment report for October from the Labor Department. The key non-farm payrolls number is expected to come in at up 205,000, compared to a rise of 263,000 in the September report.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the U.S. services PMI, manufacturers’ shipments and inventories, and the monthly chain store sales index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower on follow-through selling after Wednesday’s solid losses. A fledgling price uptrend on the daily bar chart has been negated. 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 3,800.00 and then at 3,850.00. Support for active traders is seen at 3,700.00 and then at 3,641.50. 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 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 11,000.00 and then at 11,250.00. On the downside, shorter-term support is seen at 10,750.00 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. Prices are in a three-month-old downtrend on the daily bar chart. Bears have the solid overall technical advantage. 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 neutral to bearish early today. Shorter-term technical resistance is seen at 120 even and then at the overnight high of 120 10/32. Shorter-term support lies at 119 even and then at 118 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are solidly lower in early U.S. trading. Prices are in a three-month-old downtrend on the daily bar chart. Bears have the solid overall technical advantage. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 110.00.0 and then at the overnight high of 110.09.5. Shorter-term technical support lies at 109.10.0 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 sharply lower in early U.S. trading. Bears have the firm overall near-term technical advantage. A fledgling price uptrend on the daily chart has been negated. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at .9800 and then at the overnight high of .9871. Shorter-term support is seen at .9750 and then at .9700. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower in early U.S. trading. 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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $90.36 and then at $92.00. Look for sell stops just below technical support at $87.00 and then at $86.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were lower in overnight trading, amid a “risk-off” marketplace mentality late this week, following the hawkish tone of Fed Chairman Powell at his press conference Wednesday afternoon. News reports say Russia will continue its Ukrainian grain-shipping deal and that’s also bearish. Corn bulls still have the slight overall near-term technical advantage. Soybeans bulls also have the slight chart edge. Wheat bears have regained the near-term technical advantage. On tap today is the weekly USDA export sales report.
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