Thursday, September 29–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly lower overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins. The marketplace was briefly assuaged by the Bank of England’s surprise announcement Wednesday that it will begin purchases of U.K. government bonds in order to stabilize the rattled U.K. bond market. However, markets quickly brushed aside the move as being insufficient. Risk aversion remains elevated late this week. Government bond yields and the U.S. dollar are on the rise again as the marketplace is spooked by rising inflation, the specter of global economic recession, and currency and financial markets instability.
The U.K. government has created a “loop of doom” that threatens the entire financial system and they must act urgently, said Nigel Green of the DeVere Group. “Markets now know where the weakness lies. Intervention paints a target on the back of the body that intervenes.” If the U.K. government does not change its tax and spending plans, “they will have blown up the U.K. mortgage market, U.K. pensions, amongst others, and eventually (a contagion) could spread to the wider global financial markets which themselves are sitting on thin ice as liquidity disappears,” said Green. His comments came after the Bank of England stepped in to buy U.K. bonds Wednesday. The BOE’s announcement “is the right thing to do, of course, but it seems ludicrous that it has had to act in this way,” said Green. The International Monetary Fund warned the U.K. government over its plan for tax cuts and spending, saying such is likely to increase inequality and add to pressures pushing up prices.
Read a Barron’s headline today: “Things are starting to break. But the Fed and BOE aren’t done hiking.”
The key outside markets today see Nymex crude oil prices slightly firmer and trading around $82.50 a barrel. Meantime, the yield on the 10-year U.S. Treasury note is rising and presently fetching 3.836% after rising above 4.0% overnight. The 2-year Treasury note yield is 4.4%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the third estimate of second-quarter GDP, and revised corporate profits.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bears have the solid near-term technical advantage amid a price downtrend in place on the daily bar 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 and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,751.25 and then at 3,800.00. Support for active traders is seen at the overnight low of 3,677.25 and then at the contract low of 3,613.00. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. Prices remain in a downtrend on the daily bar 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 this week’s high of 11,613.50 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 solidly lower 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 early today. Shorter-term technical resistance is seen at the overnight high of 127 9/32 and then at Wednesday’s high of 127 28/32. Shorter-term support lies at the overnight low of 125 22/32 and then at the contract low of 123 30/32. Wyckoff’s Intra-Day Market Rating: 3.5
December U.S. T-Notes: Prices are solidly lower 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 early today. Shorter-term resistance lies at the overnight high of 112.21.0 and then at this week’s high of 112.30.0. Shorter-term technical support lies at the overnight contract low of 111.20.5 and then at 111.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The December Euro currency futures are slightly lower 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 neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of .9808 and then at .9900. Shorter-term support is seen at the overnight low of .9690 and then at the contract low of .9592. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly firmer in early U.S. trading. Bears are in technical control. 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 bullish early today. Look for buy stops to reside just above technical resistance at $83.00 and then at $85.00. Look for sell stops just below technical support at $80.00 and then at $78.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were firmer overnight. On tap today is the weekly USDA export sales report. Risk aversion in the marketplace is keeping the grain market bulls tentative. Corn, wheat and soybean market bulls still have the slight overall near-term technical advantage. However, if the stock and financial markets continue in bearish turmoil, such could signal tops are in place in the grain markets. Traders are also awaiting the quarterly USDA grain stocks and small grains summary reports on Friday morning.
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