Friday, September 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The S&P 500 and Dow stock indexes are at record highs. There is little risk aversion in the world marketplace at present.
Goldman Sachs is predicting the U.S.-China trade war will be extended and will eventually see the U.S. putting tariffs on all Chinese imports into the U.S. Earlier this week, Alibaba founder Jack Ma said the U.S.-China trade war could last many years.
A feature in the marketplace this week has been falling U.S. Treasury prices (rising yields). The U.S. 10-year T-Note is presently yielding around 3.07%.
Traders and investors are looking ahead to next week, when the Federal Reserve’s Open Market Committee (FOMC) meets to discuss U.S. monetary policy. Many believe the Fed will make a slight interest rate increase at the meeting.
The key outside markets today find the U.S. dollar index mildly up on a corrective rebound from this week’s selling pressure that drove prices to a 2.5-month low on Thursday. The greenback bears have downside technical momentum to suggest a market top is in place for the USDX. Meantime, Nymex crude oil prices are firmer and trading just below $71.00 a barrel. Around present price levels rallies have been capped several times this year.
U.S. economic data due for release Friday includes the flash services purchasing managers index (PMI) and the flash manufacturing PMI.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly higher and hit a contract and record high in early U.S. trading. The bulls have the firm overall near-term technical advantage. 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 the overnight contract high of 2,945.50 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,921.75 and then at Thursday’s low of 2,913.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index December futures: Prices are firmer in early U.S. trading. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,637.50 and then at 7,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,550.00 and then at Thursday’s low of 7,514.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical advantage as a downtrend is in place on the daily chart. 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 early today. Shorter-term technical resistance is seen at the overnight high of 140 22/32 and then at 141 even. Buy stops likely reside just above those levels. Shorter-term support lies at 140 even and then at this week’s low of 139 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical advantage. Prices are in a downtrend on the daily bar chart. 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 the overnight high of 118.23.5 and then Wednesday’s high of 118.27.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 118.14.0 and then at 118.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer but did hit a 2.5-month low in early U.S. trading. The bulls are fading as a five-week-old downtrend is in place on the daily bar chart, to suggest a market top is in place. 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 neutral early today. The dollar index finds shorter-term technical resistance at 94.000 and then at 94.320. Shorter-term support is seen at the overnight low of 93.395 and then at 93.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer and near Thursday’s contract high in early U.S. trading. The bulls have the firm overall near-term technical advantage, but it’s at present price levels that rallies this year have petered out. 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 bullish early today. Look for buy stops to reside just above technical resistance at the contract high of $71.35 and then at $72.00. Look for sell stops just below technical support at the overnight low of $70.13 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were mixed overnight. Grain market bears still have the overall near-term technical advantage despite solid gains in corn and beans Thursday. If those two markets can show good follow-through strength today and produce bullish weekly high closes on a Friday, then near-term market bottoms would likely be in place. U.S. corn and soybean harvest pressure is under way, so look for farmer selling pressure to limit the upside.
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