Tuesday, October 22–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. U.S. stock indexes are close to their all-time highs scored earlier this year.
Trader and investor attitudes worldwide remain generally upbeat early this week. The U.S.-China trade negotiations appear to be progressing. President Trump said Monday afternoon the talks are “coming along very well,” suggesting a trade agreement between the world’s two largest economies could be signed as early as next month.
The Brexit situation remains in limbo this week, after a hoped-for weekend deal between the U.K. and the European Union fell through. The British Parliament is moving to again delay a vote to seal the Brexit deal. U.K. Prime Minister Boris Johnson wants a resolution to the matter sooner. The uncertainty of the matter is prompting some risk aversion from European traders.
European Union officials have warned five countries about the EU budget constricts not being met, which is also causing some concern among European market watchers.
A heavy slate of U.S. corporate earnings reports this week is the focus of U.S. stock market traders, amid no fresh geopolitical flare-ups at present.
The key “outside markets” today find Nymex crude oil prices firmer in early U.S. trading today and trading around $53.50 a barrel. Meantime, the U.S. dollar index is slightly up on a mild corrective bounce from recent selling pressure that drove the index to a nine-week low on Monday.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales report, the Richmond Fed business survey, and existing home sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage but stiff resistance still lies just overhead. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above 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 September high of 3,025.75 and then at the contract high of 3,032.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,983.75 and then at 2,966.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are slightly higher in early U.S. trading. Bulls have the firm near-term technical advantage but stiff chart resistance lies just overhead. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the September high of 8,002.50 and then at the contract high of 8,071.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,865.75 and then at 7,835.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering after hitting a five-week low overnight. Bulls still have the overall near-term technical advantage but are fading and need to show more power this week to avoid near-term technical damage. 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 160 even and then at Monday’s high of 160 15/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 2/32 and then at 158 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading and did hit a four-week low overnight. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 129.15.0 and then at 129.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at Monday’s high of 130.04.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher in early U.S. trading, on mild short covering. Bulls have faded badly recently and near-term chart damage has been inflicted. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at last Friday’s high of 97.395 and then at 97.845. Shorter-term support is seen at this week’s low of 96.885 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are firmer 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $54.17 and then at $55.00. Look for sell stops just below technical support at Monday’s low of $52.85 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were higher overnight. Corn was up around 2 1/2 cents, soybeans up around 9 cents and wheat up 5 to 6 cents. Grain trader attitudes remain upbeat early this week. The US-China trade negotiations appear to be progressing. President Trump said Monday afternoon the talks are “coming along very well,” suggesting a trade agreement between the world’s two largest economies could be signed as early as next month. Trump also Monday said China would soon be buying US agricultural products. The weekly USDA weekly crop progress report released Monday afternoon is deemed mostly bullish, showed the US corn condition at 56% good to excellent compared to 55% last week. Corn harvest is at just 30% complete as of Sunday, which was below expectations. The US soybean crop condition was rated at 54% good to excellent, the same as last week. Soybean harvest is at 46% complete, which is higher than expected. US spring wheat harvest is at 96% complete, which was close to market expectations. US winter wheat planting was at 77% complete. More wet weather in the US Midwest this week will further hamper harvesting progress and also prompt some concerns about corn and soybean crop quality. The recent weakening of the U.S. dollar index is also a bullish underlying factor for the grain markets, as it makes US grains cheaper to purchase on the world market.
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