Thursday, October 31–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed in trading overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Risk appetite has been dented Thursday on reports the U.S.-China trade talks have taken a step backwards. This should not really be a surprise to anybody. Over the past many months traders and investors have been on a rollercoaster ride regarding progress or lack thereof in the trade negotiations between the two largest economies in the world. The latest reports are coming out of China, whereby Chinese officials Thursday expressed doubts about a complete trade deal with the U.S. ever being completed.
In other overnight news, the Euro zone reported its third-quarter GDP at up a paltry 0.2% from the second quarter and up 1.1%, year-on-year.
Meantime, China’s manufacturing purchasing managers’ index (PMI) was reported at 49.3 in October versus 49.8 in September and a forecast of 49.8. A reading below 50.0 suggests contraction in the sector.
Hong Kong’s third-quarter GDP was reported down 2.9%, year-on-year, amid that city-state’s ongoing civil unrest.
The world marketplace is today digesting Wednesday afternoon’s FOMC decision to lower U.S. interest rates by 0.25%. That move was expected, but market watchers deemed the wording of the FOMC statement and Fed Chairman Powell’s press conference as suggesting the Fed is now on hold for further interest rate reductions.
The key “outside markets” find Nymex crude oil prices weaker in early U.S. trading today and trading around $54.75 a barrel. Meantime, the U.S. dollar index is solidly lower.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the employment cost index, personal income and outlays, and the ISM-Chicago business survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading after hitting a contract and record high on Wednesday. Price action this week also produced a bullish upside “breakout” above the recent highs. Bulls have the solid overall near-term technical advantage. 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,055.00 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,022.75 and then at 3,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are weaker in early U.S. trading. Prices hit a contract and record high on Wednesday. Bulls have the solid near-term technical advantage. Prices have this week seen a bullish upside “breakout” above the recent highs. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above 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 the contract high of 8,141.00 and then at 8,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,020.50 and then at 8,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly higher and hit a two-week high in early U.S. trading. Bulls have regained the overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 160 25/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at 160 even and then at the overnight low of 159 21/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
December U.S. T-Notes: Prices are solidly up in early U.S. trading. 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 bullish early today. Shorter-term support lies at 129.24.0 and then at the overnight low of 129.17.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at 130.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The December U.S. dollar index is solidly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.225 and then at 97.500. Shorter-term support is seen at the overnight low of 97.015 and then at the October low of 96.885. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly down 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 bearish early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $55.91 and then at this week’s high of $56.92. Look for sell stops just below technical support at this week’s low of $54.42 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were weaker overnight. Corn was down 3 to 4 cents, soybeans down 1 to 2 cents and wheat down 3 to 4 cents. Grain traders were dented Thursday on reports the US-China trade talks have taken a step backwards. This should not really be a surprise to anybody. Over the past many months traders and investors have been on a rollercoaster ride regarding progress or lack thereof in the trade negotiations between the two largest economies in the world. The latest reports are coming out of China, whereby Chinese officials Thursday expressed doubts about a complete trade deal with the US ever being completed. Late Wednesday there were news reports China was balking at buying the amount of US ag products that President Trumps wants. Limiting losses in the US grain futures markets is continued slow corn and soybean harvest progress. More rain, snow and cold weather is hitting the US Midwest late this week, followed by cold weather for at least the next week. Traders will be closely watching Thursday morning’s USDA weekly export sales report for any big purchases from China, which President Trump says are coming but have yet to surface. The November 8 USDA monthly supply and demand (WASDE) report is on the horizon, and will be the major data point for the grain markets for the month of November. Most look for the government to reduce the overall size of the U.S. corn and soybean harvest due to the less-than-ideal fall weather.
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