Monday, September 23–Jim Wyckoff’s Morning Markets Report
Purchasing managers’ index (PMI) reports coming out of the European Union Monday showed the Euro zone composite PMI for September come in at a lower-than-expected 50.4. A reading below 50.0 suggests contraction. More worrisome, Germany’s manufacturing PMI in September came in at 41.4, which was also worse than expected and suggests the German economy is teetering on recession.
Nymex crude oil prices are weaker and trading around $57.75 a barrel. The Wall Street Journal reported over the weekend that it could take months, not weeks, to fully restore production at the oil installations attacked in Saudi Arabia in mid-September.
The other key outside market today sees the U.S. dollar index trading up.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, and the U.S. flash manufacturing and service purchasing managers’ indexes. Several Federal Reserve officials also are scheduled to speak today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading. 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,008.25 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 last week’s low of 2,980.75 and then at 2,970.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are slightly firmer in early U.S. trading. Bulls have the solid overall technical advantage. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,897.50 and then at the September high of 8,002.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,800.00 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly up in early U.S. trading. Bulls have regained upside momentum. 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 technical resistance is seen at the overnight high of 162 7/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at 161 even and then at the overnight low of 160 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
December U.S. T-Notes: Prices are solidly higher in early U.S. trading. 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 support lies at 130.00.0 and then at 129.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.08.5 and then at 130.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.455 and then at 98.670. Shorter-term support is seen at the overnight low of 98.070 and then at Friday’s low of 97.735. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. Bulls have the overall near-term technical advantage. But it still appears the September spike high is a peak, unless there is a military flare-up in the Middle East. Prices are in a six-week-old uptrend on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-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 $58.00 and then at $59.00. Look for sell stops just below technical support at the overnight low of $57.37 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were steady to higher in overnight trading. Corn was up 2 to 3 cents, soybeans around 12 cents higher and wheat steady to 4 cents up. Short covering from the big speculative “funds” traders is featured to start the trading week. The big funds are still significantly short the US grain futures markets, which can be read as bullish heading into autumn. Those funds will have to at some point offset (buy back) those short trades. Still, gains in the grains will be limited as U.S.-China trade relations appeared to take a step backward late last week when the Chinese trade delegation went home early and cancelled some scheduled visits to some U.S. farms. However, reports said the two sides still have meetings scheduled for October. Recent price action and the technical charts still suggest “harvest lows” are in place for grain futures prices. Weather in the US Corn Belt has cooled off a bit, with some areas too wet. That’s getting a neutral reading from grain traders. This week the harvesting pace for U.S. soybeans and corn will start to pick up significantly.
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