Wednesday, October 4–Jim Wyckoff’s morning markets report
Asian and European stocks were mixed overnight. U.S. stock indexes are pointed to narrowly mixed openings when the New York day session begins. Risk appetite is not keen at mid-week, following the ouster of the U.S. Speaker of the House of Representatives Tuesday afternoon. The AP said “it was a stunning moment for Speaker Kevin McCarthy, a punishment fueled by growing grievances but sparked by his decision to work with Democrats to keep the federal government open rather than risk a shutdown. Removing the speaker launches House Republicans into chaos heading into a busy fall when Congress will need to fund the U.S. government again or risk a mid-November shutdown.”
And then there’s the U.S. Treasury sell off that has the marketplace spooked. A Barron’s headline today reads: “The bond and stock sell off has momentum. Here’s how it could end.” The story goes on to say “markets have decided to pay attention to the prospect of the Federal Reserve keeping interest rates higher for longer. And now that’s all they can see.” The story said the ways the bond market rout can end would be if the Fed stops or reduces its bond selling. Or, “something breaks.” The article added weakening U.S. economic data may be needed to help turn the tide of the higher rates narrative. “Friday’s September jobs report could be the place for that to begin.”
Indeed, traders are starting to look ahead to Friday’s September employment situation report from the Labor Department. The key non-farm payrolls number is expected to come in at up 170,000 compared to a rise of 187,000 in the September report.
The key outside markets today see the U.S. dollar index weaker on a corrective pullback after hitting a 10-month high Tuesday. Nymex crude oil prices are lower and trading around $88.00 a barrel. There is an OPEC meeting today. Meantime, the benchmark U.S. Treasury 10-year note yield is presently fetching 4.817% and has hit a 16-year high.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the global services PMI, the ISM report on business services, manufacturers’ shipments and inventories and the weekly DOE liquid energy stocks report.
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading after hitting a four-month low overnight. Prices are in a two-month-old downtrend on the daily bar 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 neutral early today. Today, shorter-term technical resistance comes in at 4,300.00 and then at Tuesday’s high of 4,335.75. Support for active traders is seen at the overnight low of 4,235.50 and then at 4,200.00. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly 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 even with the 9-day. The 9-day is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 14,850.00 and then at last week’s high of 15,060.75. On the downside, shorter-term support is seen at the September low of 14,586.00 and then at 14,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading and hit another contract low. 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 bearish early today. Shorter-term technical resistance is seen at Tuesday’s high of 112 24/32 and then at this week’s high of 113 24/32. Shorter-term support lies at the overnight contract low of 109 20/32 and then at 109 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and hit a contract low 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at Tuesday’s high of 107.14.0 and then at this week’s high of 107.29.5. Shorter-term technical support is seen at the overnight contract low of 106.03.5 and then at 106.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
The December Euro currency futures are firmer on short covering after hitting a 10-month low on Tuesday. Prices are trending lower and bears are in solid near-term technical control. 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 neutral to bullish early today. The Euro currency finds shorter-term technical resistance at 1.0600 and then at 1.0652. Shorter-term support is seen at this week’s low of 1.0482 and then at 1.0450. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are lower and hit a more-than-two-week low 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $89.59 and then at Tuesday’s high of $90.27. Look for sell stops just below technical support at $87.00 and then at $86.00. Wyckoff’s Intra-Day Market Rating: 4.0
Grain futures prices were mixed in overnight trading. Risk aversion in the general marketplace is keeping the grain market bulls very timid. Harvesting of soybeans and corn is in full swing and that is also a bearish seasonal factor amid commercial hedge selling. Technicals are fully bearish for corn, wheat and meal, and moderately bearish for soybeans.
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.