Thursday, September 24–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are set to open the New York day session mixed. Stock markets have turned more wobbly this week. Said one analyst in a morning email dispatch: “If the latest sell-off is just about the removal of froth and a healthy correction, it may indicate we are near a bottom and it’s time to reaccumulate stocks. This approach would be based on the notion that the U.S. and the global economy will continue heading in the right direction towards a full recovery. And with central banks across the globe remaining extremely generous with their policies, we should not worry about some bumps along the road. However, the risks of a stalling recovery are growing as spikes in Covid-19 cases surge across Europe and expectations are for similar trends in the U.S. if no action is taken. The virus continues to be winning at this stage and there are no clear answers as to when a vaccine will be delivered.”
Not quite half-way through the “rough waters” period (September and October) for the stock market, it seems odds do not favor a strong recovery to new record highs in the U.S. stock indexes. It’s also a period when North Americans and Europeans will be staying inside more as colder weather approaches, with the potential for new Covid restrictions on businesses crimping their revenues. And there is no new financial stimulus package for Americans in sight. Throw in the element of the high potential for a disputed and even protracted U.S. presidential election result (President Trump said Wednesday the presidential election in November will likely be decided by the Supreme Court), and all of the above should favor trader/investor demand safe-haven assets like gold, the U.S. dollar and U.S. Treasuries. Yet, many longtime market watchers are presently scratching their heads that only the greenback is benefiting at present, while gold and silver are tanking and U.S. Treasuries languish.
The important outside markets today see the U.S. dollar index slightly up and hitting another two-month high overnight. Nymex crude oil prices are near steady and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.67% today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, new residential sales and the Kansas City Fed manufacturing survey. Once again, several Federal Reserve officials speak today, including Fed Chairman Powell speaking to a Senate panel.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly firmer in early U.S. trading after hitting a seven-week low overnight. Prices are trending lower on the daily chart. 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 3,326.25 and then at 3,350.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,210.00 and then at 3,200.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are weaker in early U.S. trading. Prices are trending down on the daily chart. 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 neutral early today. Shorter-term technical resistance is seen at 10,900.00 and then at 11,000.00. On the downside, shorter-term support is seen at this week’s low of 11,656.50 and then at 10,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are slightly firmer in early U.S. trading. Bulls were working on a near-term price uptrend but it has stalled out. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 176 31/32 and then at last week’s high of 177 14/32. Shorter-term support lies at last week’s low of 175 28/32 and then at 175 16/32. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at last week’s high of 139.24.0 and then at the September high of 139.29.0. Shorter-term technical support lies at last week’s low of 139.10.5 and then at 139.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are weaker in early U.S. trading and hit a two-month low overnight. Bulls still have the overall near-term technical advantage but are fading fast as prices are now trending lower. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance 1.1739 and then at 1.1793. Shorter-term support is seen at the overnight low of 1.1652 and then at 1.1600. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is even with the 18-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 $40.75 and then at $41.00. Look for sell stops just below technical support at this week’s low of $38.87 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are lower in early U.S. pre-market trading. Bulls are fading a bit but still have the near-term technical advantage in all three markets. A strong U.S. dollar and wilting raw commodity sector, overall, are weighing on the grains. Traders will closely examine this morning’s weekly USDA export sales report. Focus is on U.S. harvest and export demand, as China continues its buying binge, as seen in the daily USDA export sales announcements.
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