Trader/investor risk attitudes improve at mid-week

Wednesday, September 23–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly firmer overnight. U.S. stock indexes are set to open the New York day session higher. At mid-week there is less risk aversion in the global marketplace compared to Monday. The U.S. House of Representatives late Tuesday passed a short-term funding bill that will keep the federal government running until early December. However, it’s still unlikely the Congress and President Trump will get a new, second financial stimulus package for Americans out the door before the November elections. 

Reports overnight said a U.K. scientist has warned a full second lockdown is coming, as Prime Minister Boris Johnson considers banning household visits and other restrictions. Johnson warned the U.K. faces a long, hard winter of lockdowns.

Meantime, the Euro zone composite purchasing managers index (PMI) for September came in at 50.1 vs 51.9 in August. Better growth in manufacturing led by Germany was offset by a renewed downturn in the service sector as a result of Covid-19 restrictions.

The important outside markets today see the U.S. dollar index near steady following solid gains this week that have pushed the USDX to a six-week high. Nymex crude oil prices are slightly firmer and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.66% today.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index, the U.S. flash and services PMI’s, and the weekly DOE liquid energy stocks report. Several Federal Reserve officials are slated to give speeches today, including Fed Chairman Powell to a House committee.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Prices are still 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 Tuesday’s low of 3,256.50 and then at this week’s low of 3,217.75. Wyckoff’s Intra-day Market Rating: 6.0

December Nasdaq index futures: Prices are firmer in early U.S. trading. Prices are still 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 11,222.00 and then at 11,300.00. On the downside, shorter-term support is seen at the overnight low of 11,076.00 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are weaker in early U.S. trading. Bulls are working on a near-term price uptrend but need to show more power soon to keep it going. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 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: 4.5

December U.S. T-Notes: Prices are weaker 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 neutral to bearish 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: 4.5

EURO CURRENCY

The December Euro currency futures are slightly up in early U.S. trading after hitting another seven-week low overnight. Bulls still have the overall near-term technical advantage but are fading as trading has turned sideways-to-lower at higher levels and the uptrend has ended. 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 neutral to bearish early today. The Euro currency finds shorter-term technical resistance 1.1793 and then at 1.1850. Shorter-term support is seen at the overnight low of 1.1691 and then at 1.1650. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

November Nymex crude oil prices are slightly higher 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 bullish early today. Look for buy stops to reside just above technical resistance at $40.27 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: 5.5

GRAINS

US grain futures are steady to weaker in early U.S. pre-market trading. Bulls still have the near-term technical advantage in all three markets and appear to have stabilized prices following Monday’s sharp sell off. 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