Friday, October 12–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight on corrective bounces from this week’s strong selling pressure. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. However, keep your seatbelts buckled today because volatility is likely to remain high on this last trading day of the week, heading into an uncertain weekend not knowing what to expect come Monday morning.
Price action this week from a technical perspective strongly suggests the U.S. stock indexes have put in near-term tops, if not major tops. If so, such is a bullish development for the competing hard assets like the metals.
Gold prices have backed off a bit today after the strongest one-day gains in over two years were seen on Thursday. Now, the yellow metal is in a much better technical posture to suggest higher prices are likely in the coming weeks, or longer.
News U.S. President Trump and Chinese leader Xi Jinping will sit down and talk in November at the G20 meeting in Argentina could be helping to assuage market concerns today. For months the two largest economies have been on a downhill slide in relations. The Chinese yuan rebounded against the U.S. dollar today, in part on that news.
Another worrisome factor in the marketplace this week is notions the strong U.S. economic expansion could be coming to an end, due in part to a Federal Reserve monetary policy that got too aggressive in raising interest rates. President Trump again admonished the Fed this week for raising rates too fast. He called the Fed “crazy” and “loco.”
The key outside markets today find the U.S. dollar index modestly up. Meantime, November Nymex crude oil prices are firmer on a corrective bounce from strong selling pressure the past two days that begins to suggest that market has topped out. Take a look at a daily chart for unleaded gasoline futures and it certainly suggests lower gasoline prices at the retail pumps the rest of this year, and maybe beyond.
U.S. economic data due for release Friday includes the import and export prices report, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading, on a corrective bounce after hitting a three-month low on Thursday. This week’s price action strongly suggests that at least a near-term market top is in place, if not a major top. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,785.00 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,746.25 and then at this week’s low of 2,712.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index December futures: Prices are solidly higher in early U.S. trading after hitting a 4.5-month low on Thursday. Recent price action strongly suggests a near-term market top is in place, if not a major market top. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 7,169.00 and then at 7,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,034.25 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower in early U.S. trading today. Bears have the solid overall near-term technical advantage as a six-week-old downtrend is in place on the daily chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-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 138 15/32 and then at this week’s high of 138 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 137 30/32 and then at 137 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 solid overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-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 118.08.5 and then at this week’s high of 118.14.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.00.0 and then at 117.28.0. 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 slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above 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 95.000 and then at Thursday’s high of 95.125. Shorter-term support is seen at the overnight low of 94.640 and then at 94.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer in early U.S. trading, on a corrective bounce from recent strong selling pressure that suggests this market has topped out. The bulls still have the overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is above 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 $72.01 and then at Thursday’s high of $72.76. Look for sell stops just below technical support at this week’s low of $70.51 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were mostly firmer overnight. Traders are awaiting today’s weekly USDA export sales report. While market bottoms look to be in place for all three major grain markets, the upside is limited by big U.S. corn and soybean crops being harvested and the U.S.-China trade war. Still, my bias is for choppy and sideways-to-higher price action into the end of this year.
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