Tuesday, November 5–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up in trading overnight. U.S. stock indexes are pointed toward modest gains and new all-time highs when the New York day session begins.
Risk sentiment worldwide remains upbeat amid ideas the U.S. and China are very close to a partial trade deal, called “Phase 1.” There are reports China is now pushing the U.S. to roll back some more tariffs on Chinese imports, with the U.S. possibly agreeing to such to get the deal sealed.
In overnight news, the Euro zone September producer price index was reported up 0.1% from August and down 1.2%, year-on-year. The report is a reminder that very low inflation in most of the major world economies is still a problem.
The OPEC oil cartel has issued a report saying booming U.S. shale oil production will likely keep the cartel constraining its own oil output for at least the next five years. I have covered the energy markets for 35 years and the U.S. shale oil production technology coming on line about 10 years ago has been the most fundamentally game-changing development of all the markets I have followed the past three decades.
The key “outside markets” today see the U.S. dollar index slightly up. Nymex crude oil prices are higher and trading around $57.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the international trade report, the U.S. services PMI, the ISN non-manufacturing report, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly higher and hit another new contract and record high in early U.S. trading. Bulls have the solid overall near-term technical advantage to suggest more upside in the near term. 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,085.75 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 3,064.75 and then at 3,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are firmer and hit another new contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside in the near term. 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 8,248.00 and then at 8,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 8,164.00 and then at 8,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the overall near-term technical advantage but are fading again early this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 159 20/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 18/32 and then at the October low of 158 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading as bulls are fading again. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 129.09.0 and then at the October low of 129.01.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.21.0 and then at 129.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly up in early U.S. trading. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.470 and then at last week’s high of 97.800. Shorter-term support is seen at the overnight low of 97.275 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are up in early U.S. trading. Bulls have momentum on their side. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $57.43 and then at $58.00. Look for sell stops just below technical support at the overnight low of $56.30 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mixed to firmer overnight. Corn was up around 1 cent, soybeans down around 1 cent and wheat up 2 to 4 cents. The grain markets are mostly in pause mode ahead of this Friday’s key USDA monthly supply and demand report (WASDE). Forecasts for the November WASDE report show US corn average corn yield at 167 bushels per acre compared to 168.4 bushels in the last USDA report. US corn production is seen at 13.6 billion bushels compared to 13.779 in last month’s report. US soybean average yield is forecast at 46.6 bushels per acre compared to 46.9 bushels in the last USDA report. US soybean production is seen at 3.51 billion bushels versus 3.55 billion in last month’s report. Limiting selling interest in grain futures this week are notions the U.S. and China are moving closer to a trade deal that would include significantly more Chinese purchases of U.S. agricultural products. However, limiting buying interest in futures is commercial seasonal hedge pressure in the corn and soybean futures markets amid the U.S. harvest. The USDA weekly crop progress report out Monday afternoon showed US corn harvest at 52% complete versus 54% expected. US soybean harvest was at 75% complete, which was in line with expectations. US winter wheat planting was at 89% complete versus 91% expected.
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