Stock Markets pause ahead of uncertain weekend

Friday, November 6–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session lower on corrective pullbacks from this week’s strong gains. The U.S. presidential election is looking increasingly likely that Joe Biden will unseat President Trump. The balance of the U.S. Senate is still up in the air, with the possibility the Democrats could still gain a slim majority. Right after the elections it was assumed by most the Republicans would control the Senate. Now, with the chance the Democrats could gain control, the U.S. stock market bulls are a bit more concerned. Still, Friday morning’s price pressure on the stock indexes is so far just a normal correction from the recent gains.

On tap Friday morning is the U.S. employment situation report for October from the Labor Department. The key non-farm payrolls number is seen up 530,000 and the unemployment rate is seen at 7.7% versus 7.9% seen in September.

The gold market has posted a solid rally in the wake of the U.S. elections, with prices hitting a six-week high overnight, mostly boosted by the depreciating value of the U.S. dollar but also likely from safe-haven demand on worries about the peaceful transfer of power in the U.S., should Biden win the presidential election, and on the worsening Covid-19 situation in the U.S. and Europe. Trump gave a short speech Thursday night trying to cast doubt on the U.S. voting system, implying fraud. And U.S. Covid cases hit a record Thursday. Dr. Scott Gottlieb said Friday morning on CNBC the U.S. this winter will find “a raging epidemic.” A Wall Street Journal story Friday is headlined, “Fed Sees Virus Imperiling Economy,” referring to the just-concluded FOMC meeting in which the Federal Reserve warned that Covid-19 is still posing serious risks for the U.S. economy.

The U.S. dollar index is lower again today, hit a nine-week low, and has sold off sharply in the wake of the U.S. election. The other important outside market sees crude oil prices lower and trading around $37.50 a barrel. The oil market is seeing a corrective pullback Friday after solid gains seen earlier this week. The yield on the benchmark 10-year U.S. Treasury note is currently fetching 0.77%.

Other U.S. economic data due for release Friday includes the consumer credit report and monthly wholesale trade.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are sharply lower on a normal downside correction from this week’s good gains. Bulls still have the solid overall near-term technical advantage and prices are still in striking range of hitting new highs. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above 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 this week’s high of 3,522.50 and then at the October high of 3,541.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Thursday’s low of 3,428.25 and then at 3,400.00. Wyckoff’s Intra-day Market Rating: 4.0

December Nasdaq index futures: Prices are lower on a normal corrective pullback after hitting a three-week high Thursday. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 this week’s high of 12,119.50 and then at the October high of 12,249.00. On the downside, shorter-term support is seen at Thursday’s low of 11,771.25 and then at 11,600.00. Wyckoff’s Intra-Day Market Rating: 4.0.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are weaker in early U.S. trading. Prices this week have scored a big and bullish reversal up, which is a solid clue that a market bottom is in place. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) neutral early today. Shorter-term technical resistance is seen at the overnight high of 174 31/32 and then at this week’s high of 175 27/32. Shorter-term support lies at Thursday’s low of 173 30/32 and then at 173 16/32. Wyckoff’s Intra-Day Market Rating: 4.5

December U.S. T-Notes: Prices are weaker in early U.S. trading. Prices this week scored a big and bullish “outside day” up on the daily bar chart, to suggest a near-term bottom is in place. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 resistance lies at the overnight high of 139.01.0 and then at this week’s high of 139.08.5. Shorter-term technical support lies at Thursday’s low of 138.24.5 and then at 138.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

EURO CURRENCY

The December Euro currency futures are higher and hit a three-week high in early U.S. trading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the October high of 1.1894 and then at 1.1950. Shorter-term support is seen at the overnight low of 1.1804 and then at 1.1750. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

December Nymex crude oil prices are lower in early U.S. trading, on a corrective pullback from this week’s good gains. 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 neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $38.61 and then at this week’s high of $39.25. Look for sell stops just below technical support at the overnight low of $37.33 and then at $37.00. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

US grain futures are higher in early U.S. pre-market trading. Bulls are having a very good week. Better risk appetite in the marketplace is fueling upside action in the grains. The grain market bulls have the solid overall near-term technical advantage amid price uptrends in place in all three 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