Stock markets starting October in stable fashion

Thursday, October 1–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session higher. Many Asian stock markets were closed for a holiday, while the Tokyo Stock Exchange had to halt stock trading due to technical problems. The stock and financial markets are half-way through what can be turbulent months of September and October. A glance across the markets spectrum shows no serious shocks or major volatility during September, although some markets did experience moderate rises in volatility—but also which can be considered not unusual. The U.S. stock indexes did get a bit wobbly during September but prices now appear to have stabilized.

Slight hopes for a new U.S. financial stimulus package for American citizens and businesses faded Wednesday after the Democrats and Republicans had a flurry of discussions earlier this week. Many doubt any plan will be agreed upon before the U.S. elections in early November.

In overnight news, the Euro zone September manufacturing purchasing managers index (PMI) was reported at 53.7 versus the August reading of 51.7. The September PMI was right in line with market expectations. A reading above 50.0 suggests growth in the sector.

Traders and investors are awaiting the U.S. economic data point of the week, which is Friday morning’s monthly jobless report for September from the Labor Department. The key non-farm payrolls number is forecast at up 875,000 and the unemployment rate is forecast at 8.2%.

The important outside markets early today see the U.S. dollar index weaker. Nymex crude oil prices are weaker and trading around $40.00 a barrel. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.68% today.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, personal income and outlays, the ISM report on business manufacturing, the U.S. manufacturing PMI, the global manufacturing PMI, construction spending, and domestic auto industry sales.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are higher and hit a two-week high in early U.S. trading. Bulls have the firm 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 above the 9-day and 18-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 3,400.00 and then at 3,420.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,343.25 and then at this week’s low of 3,287.50. Wyckoff’s Intra-day Market Rating: 6.0

December Nasdaq index futures: Prices are higher and hit a three-week high in early U.S. trading. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 11,600.00 and then at 11,700.00. On the downside, shorter-term support is seen at the overnight low of 11,375.00 and then at this week’s low of 11,140.25. Wyckoff’s Intra-Day Market Rating: 6.0.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls are fading late this week. 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 176 8/32 and then at 177 even. Shorter-term support lies at this week’s low of 175 14/32 and then at 175 even. Wyckoff’s Intra-Day Market Rating: 4.0

December U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 139.17.0 and then at this week’s high of 139.26.0. Shorter-term technical support lies at this week’s low of 139.11.0 and then at 139.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

EURO CURRENCY

The December Euro currency futures are firmer in early U.S. trading. Prices are still trending lower on the daily chart. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1776 and then at 1.1800. Shorter-term support is seen at 1.1700 and then at 1.1650. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

November Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above 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 the overnight high of $40.47 and then at this week’s high of $40.80. Look for sell stops just below technical support at $39.00 and then at this week’s low of $38.41. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

US grain futures are mostly up in early U.S. pre-market trading, on follow-through buying from Wednesday’s surprising and strong gains following a bullish USDA quarterly stocks report that shocked many long-time market watchers. Corn, soybean meal and wheat futures pushed to multi-month highs and closed out the month with technically bullish monthly and quarterly high closes. On tap today is the weekly USDA export sales report. Focus now returns to U.S. harvest results, which are coming in better than expected so far.    

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