Monday, September 26–Jim Wyckoff’s Morning Markets Report
The global marketplace is experiencing very rough waters Monday, in a continuation of keen risk-off trading attitudes seen late last week. U.S. and/or global economic recession worries are rising rapidly. Global stock markets were mostly lower overnight. U.S. stock indexes are pointed to lower openings and near last week’s three-month lows when the New York day session begins. The Wall Street Journal today reported this year has been the worst year since 1930 for a “buy-the-dips” strategy in U.S. stock trading and investing. FOREX volatility and rising government bond yields are in the spotlight Monday.
The U.K.’s big plan to sell more government bonds in an effort to finance better economic growth has helped to prompt a rout in global government bond markets. “The bond vigilantes are back and the British pound is the target,” read a Barron’s headline today.
Broker SP Angel in an email dispatch this morning said gold saw a “minor flash crash” overnight. “The metal continues to get hammered” by the U.S. dollar. Foreign exchange volatility is rising, with the British pound passing its record low in 1984 and presently trading around $1.04 to the dollar. The Chinese yuan is nearing 2008 lows. “Traders are ramping up short positions on gold, with fund managers more bearish on the metal than any other time over the past four years, according to a Bloomberg report. Rising U.S. Treasury yields have been a major headwind to the gold and silver markets. “Gold ETF outflows continue, with holdings near their 2-year lows,” said the broker.
The key outside markets today see Nymex crude oil prices weaker, hitting a seven-month low and trading around $78.25 a barrel. The U.S. dollar index is higher and pushed to another 20-year high in early U.S. trading. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.673%. The 2-year Treasury note yield is 4.285%.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower and near last week’s three-month low in early U.S. trading. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,718.25 and then at 3,750.00. Support for active traders is seen at last week’s low of 3,660.25 and then at the June low of 3,657.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are weaker and near last week’s three-month low in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at Friday’s high of 11,600.25 and then at 11,796.00. On the downside, shorter-term support is seen at the June low of 11,135.00 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and near last Friday’s contract low in early U.S. trading. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 128 31/32 and then at 130 even. Shorter-term support lies at the contract low of 126 29/32 and then at 126 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are solidly lower and near last week’s contract low in early U.S. trading. Prices are in a seven-week-old downtrend on the daily bar chart and bears have the solid technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 112.225.0 and then at 113.00.0. Shorter-term technical support lies at the contract low of 111.25.0 and then at 111.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The December Euro currency futures are lower and hit another contract low in early U.S. trading. Bears have the strong overall near-term technical advantage. The shorter-term moving averages for the Euro 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 for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of .9770 and then at .9800. Shorter-term support is seen at the overnight contract low of .9609 and then at .9550. Wyckoff’s Intra Day Market Rating: 3.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower and hit a seven-month low in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $80.00 and then at $82.00. Look for sell stops just below technical support at the overnight low of $77.21 and then at $76.00. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
U.S. grain futures were weaker overnight. Keener risk aversion in the marketplace early this week is once again squelching the grain market bulls. Corn and soybean market bulls still have the overall near-term technical advantage. Wheat bulls have the slight overall near-term technical edge and have restarted price uptrends on the daily charts. However, if the stock and financial markets continue in bearish turmoil in the coming weeks (remember, September and October can be a historically rocky period for stocks, bonds and currencies), such could signal tops are in place in the grain markets. On tap today is the weekly USDA grain export inspections report.
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