Thursday, October 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly weaker and European shares mostly firmer. U.S. stock indexes are set to open the New York day session weaker. Risk appetite among traders and investors has waned recently. Covid-19 stimulus package discussions between congressional Democrats and Republicans continue, even after House Speaker Pelosi’s stated deadline for a deal has passed. The window is rapidly closing on any deal reached and implemented before the U.S. election in early November.
Reports say Goldman Sachs is forecasting a commodity market bull run stoked by inflation and new demand driven by additional fiscal and monetary stimulus by the world’s major economies. Goldman also reportedly forecast a return of 28% over the next 12 months on their commodity index, though the firm said individual commodities are likely to perform much better. This news comes as today it was announced Goldman was fined $350 million by Hong Kong securities and futures regulators over “serious lapses and deficiencies.” So, Goldman’s bull market forecast for commodities makes many veteran market watchers wonder if the firm just “talking their book.”
The important outside markets early today see the U.S. dollar index higher on a corrective bounce after hitting a six-week low Wednesday. Nymex crude oil prices are higher and trading around $40.25 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.81% today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, existing home sales, leading economic indicators, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls have the firm overall near-term technical advantage but have faded recently. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 3,458.00 and then at this week’s high of 3,496.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,402.50 and then at 3,380.00. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 11,779.25 and then at this week’s high of 11,950.50. On the downside, shorter-term support is seen at this week’s low of 11,585.00 and then at 11,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer on short covering after hitting a 4.5-month low on Wednesday. Bulls are fading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Wednesday’s high of 173 24/32 and then at 174 even. Shorter-term support lies at the overnight low of 172 29/32 and then at this week’s low of 172 17/32. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading, on short covering after hitting a four-month low Wednesday. Bulls are fading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Wednesday’s high of 138.24.5 and then at Tuesday’s high of 138.28.5. Shorter-term technical support lies at this week’s low of 138.13.0 and then at 138.08.0. 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 on a corrective pullback after hitting a four-week high on Wednesday. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above 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 at the overnight high of 1.1879 and then at this week’s high of 1.1894. Shorter-term support is seen at 1.1800 and then at 1.1773. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are firmer in early U.S. trading. Trading remains choppy. 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 early today. Look for buy stops to reside just above technical resistance at $41.00 and then at this week’s high of $41.90. Look for sell stops just below technical support at $39.36 and then at $39.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are mixed in early U.S. pre-market trading. On tap today is the weekly USDA export sales report. Traders want to see if China continues snapping up U.S. grains. Grain market bulls remain in solid technical control. Bullish speculators continue to enter the grain futures markets as the charts are fully bullish. There are no early clues to suggest that market tops are close at hand. The path of least resistance for prices remains sideways to higher.
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