Monday, October 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. Markets in mainland China were closed for a holiday. U.S. stock indexes are pointed to mixed openings when the New York day session begins. The marketplace is still uneasy to start the month of October, which history shows can be rocky for the stock and financial markets. There are reports and rumors swirling Monday morning that investment bank Credit Suisse may be in financial trouble. Broker SP Angel this morning said in an email dispatch: “A global tightening of liquidity by central banks is hitting the credit sector, with signs of a credit crunch beginning to surface. A syndicate of banks including Barclays and Bank of America cancelled a $3.9 billion debt offering last week amid a lack of demand. Bloomberg reports a group of underwriters including Goldman Sachs, Bank of America and Credit Suisse took losses estimated at over $1 billion on a debt package to private equity firms amid higher yields and lower demand. Outflows in U.S. investment grade bonds hit their third largest outflow on record last week, following six weeks of withdrawals totaling $22.3 billion. Credit default swaps across major European banks have soared in September, with Credit Suisse’s CEO noting the bank was facing a ‘critical moment.’”
In other overnight news, the U.K. government has scrapped a major part of its tax-cut plan after U.K. and European financial markets became roiled when it was announced. The markets were somewhat assuaged by pivot from the U.K. government.
The Euro zone September manufacturing purchasing managers index (PMI) came in at 48.4 versus 48.5 in August. A reading below 50.0 suggests contraction in the sector.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are sharply higher and trading around $82.80 a barrel. Traders are awaiting an OPEC cartel meeting on Wednesday and may cut production by 1 million barrels a day, reports said. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.787%.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the global manufacturing PMI, the ISM report on business manufacturing, construction spending and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are a bit firmer in early U.S. trading, on short covering after hitting a contract low overnight. Prices last Friday closed at a technically bearish weekly, monthly and quarterly low close. Bears have the solid near-term technical advantage amid a six-week-old price downtrend in place 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 and 18-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 Friday’s high of 3,693.75 and then at 3,751.25. Support for active traders is seen at the overnight contract low of 3,571.75 and then at 3,550.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are near steady in early U.S. trading after hitting a contract low overnight. Prices last Friday closed at a technically bearish weekly, monthly and quarterly low close. Prices remain in a six-week-old downtrend on the daily bar 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 early today. Shorter-term technical resistance is seen at Friday’s high of 11,357.25 and then at 11,613.50. On the downside, shorter-term support is seen at the overnight contract low of 10,890.75 and then at 10,700.00. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering and some safe-haven demand. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid advantage. 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 bullish early today. Shorter-term technical resistance is seen at last week’s high of 128 1/32 and then at 129 even. Shorter-term support lies at the overnight low of 127 4/32 and then at 126 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 and safe-haven demand. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid 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 bullish early today. Shorter-term resistance lies at last week’s high of 112.30.0 and then at 113.10.0. Shorter-term technical support lies at the overnight low of 111.25.5 and then at 111.16.0. 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. Bears have the solid overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at last week’s high of .9908 and then at 1.0000. Shorter-term support is seen at .9690 and then at the contract low of .9592. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are sharply up in early U.S. trading. Bears are still in overall technical control. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $85.00 and then at $87.00. Look for sell stops just below technical support at the overnight low of $80.87 and then at $80.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures were mixed to firmer overnight. Risk sentiment in the general marketplace remains elevated Monday. On tap today is the weekly USDA export inspections report and the afternoon crop progress reports. Corn, wheat and soybean market bulls have the slight overall near-term technical advantage. However, if the stock and financial markets continue in turmoil, the upside will be limited in the grain futures markets.
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