Thursday, November 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins, on an extension of a strong rebound from Monday’s sell-off that drove the indexes to six-month lows. Stock market traders and investors are glad to have the historically turbulent month of October out of the way and are now hoping for a seasonal Santa Claus rally. However, those thinking the world stock markets have seen the “all clear” siren as the calendar turns to November are likely going to be disappointed.
Focus in the U.S. is turning to next week’s mid-term elections, which many believe will be a referendum on the performance of President Trump.
The key outside markets today find the U.S. dollar index solidly lower on a downside correction from recent strong gains that pushed the index to a 16-month high on Wednesday. Meantime, December Nymex crude oil prices are weaker, hit a nine-week low overnight and are trading just below $65.00 a barrel. Recent technical damage on the charts suggests more downside for crude oil in the near term.
The key U.S. economic data point of the week, if not the month, will be Friday’s November employment report from the Labor Department. The key non-farm payrolls number is forecast to come in at up 188,000. However, Wednesday’s ADP national employment report reading of up 227,000 suggests Friday’s jobs report could be stronger than forecast.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the U.S. manufacturing purchasing managers index, construction spending and the ISM manufacturing report on business.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Recent price action still suggests a market top is in place. Prices Monday hit a six-month low. Prices are still in a four-week-old downtrend on the daily bar chart, but now just barely. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,737.25 and then at 2,750.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,705.50 and then at Wednesday’s low of 2,682.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index December futures: Prices are higher in early U.S. trading, on more corrective upside action after hitting a six-month low on Monday. Recent price action still suggests a market top is in place. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 7,039.25 and then at 7,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,951.00 and then at 6,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today. A fledgling price uptrend on the daily bar chart has been negated. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 138 9/32 and then at Wednesday’s high of 138 24/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 137 27/32 and then at 137 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are near steady in early U.S. trading. A fledgling uptrend is still in place on the daily bar chart, but now just barely. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 118.16.5 and then at Wednesday’s high of 118.21.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 118.11.5 and then at 118.07.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is solidly lower on a corrective pullback after hitting a contract and 16-month high on Wednesday. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 96.980 and then at 97.250. Shorter-term support is seen at the overnight low of 96.315 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker and hit a nine-week low in early U.S. trading. Recent strong selling pressure suggests this market has topped out. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $65.50 and then at $66.00. Look for sell stops just below technical support at the overnight low of $64.65 and then at $64.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were mixed overnight. Traders will closely examine this morning’s weekly USDA export sales report. The grain market bears still have the overall near-term technical advantage. The upside will continue to be limited in the next couple weeks by big U.S. corn and soybean crops harvest that will be winding down. Any progress on the U.S.-China trade war front would be bullish for the grains, but an escalation would be bearish.
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