Friday, October 18–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly down overnight, led by sharp losses in China stock indexes. The U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
World equity markets were pressured on news that China’s gross domestic product in the third quarter grew by 6.0% on an annual basis, which is the slowest pace in at least 27 years. The GDP 3Q figure was forecast at up 6.1%. On the positive side, China’s industrial production in September was reported up 5.8%, year-on-year, versus expectations for a rise of 4.9%.
The upbeat Brexit news this week has made for a strong rally in the British pound, which hit a four-month high. The U.K. Parliament will vote this weekend to ratify the agreement.
Nymex crude oil prices are firmer in early U.S. trading Friday and trading around $54.25 a barrel. The other key “outside market” sees the U.S. dollar index slightly lower. The greenback is fading, due in part to some downbeat U.S. economic data released this week that ups the odds of a Federal Reserve interest rate cut coming yet this year.
U.S. economic data due for release Friday includes leading economic indicators. Several Federal Reserve officials will also give speeches today, which will be closely monitored by the marketplace.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bulls have the firm overall near-term technical advantage but stiff resistance lies just overhead. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,008.00 and then at the September high of 3,025.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 2,985.25 and then at 2,966.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are slightly lower in early U.S. trading. Bulls have the firm near-term technical advantage but stiff chart resistance lies just overhead. 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 neutral early today. Shorter-term technical resistance is seen at the September high of 8,002.50 and then at the contract high of 8,071.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,917.25 and then at 7,859.75. Sell stops are likely located just below those levels. 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. Bulls still have the overall near-term technical advantage but are fading. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 160 17/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 159 10/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are weaker 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at this week’s low of 129.16.5 and then at 129.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.02.0 and then at 130.10.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower lower and near this week’s six-week low. Bulls are fading badly. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 97.845 and then at 98.000. Shorter-term support is seen at this week’s low of 97.220 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above with 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 $55.00 and then at $56.00. Look for sell stops just below technical support at the overnight low of $53.73 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were mixed overnight. Corn was up down 3 cents, soybeans up 2 to 3 cents and wheat down 3 cents. The highlight of the day in the grain markets will be the weekly USDA export sales report, which was delayed by one day due to the US holiday on Monday. Traders are looking for US corn sales of 400,000 to 800,000 metric tons (MT), soybeans sales of 900,000 to 1,600,000 MT, and wheat 250,000 to 550,000 MT. Traders will be examining that data for any stepped-up purchases from China. The charts for all three grains have turned bullish in recent weeks, which is inviting more speculative buying interest, including from the big “funds.” Also bullish for grains is the major winter storm that hit the northern US plains and Corn Belt last week, damaging crops in the field and further delaying an already slow corn and soybean harvesting pace. Soybean and corn traders are watching a persistent dry weather pattern developing in Brazil and Argentina crop-growing regions. The slumping US dollar on the foreign exchange market this week is also bullish for US grains, as it makes them less expensive on world markets, where most grain is priced in US dollars. The US dollar index this week hit a six-week low.
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