Wednesday, October 12–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to firmer overnight. U.S. stock indexes are pointed to higher openings when the New York day session begins. The marketplace remains less than “risk-on” at mid-week, following a downbeat assessment of the global economy by the International Monetary Fund on Tuesday.
The U.K. government bond market is still in turmoil, as the Bank of England this week was forced to buy inflation-linked bonds as part of its bond-buying program. The BOE today reiterated it will shut down its bond-buying program on Friday. There are worries U.K. pension funds could be lost if the U.K. bond market rout continues.
The key outside markets today see the U.S. dollar index slightly weaker. Nymex crude oil prices are slightly higher and trading around $89.50 a barrel. The U.S. Treasury 10-year note yield is presently fetching 3.962%.
Traders are looking ahead to key U.S. inflation reports on Wednesday and Thursday mornings. The producer price index report for September is out Wednesday and the consumer price index report for September is out Thursday. The consumer price index is expected to come in at up 8.1%, year-on-year, following a rise of 8.3% in August.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading, on short covering. Bears still have the solid overall near-term technical advantage amid a seven-week-old price downtrend in place on the daily bar 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 neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,667.50 and then at 3,700.00. Support for active traders is seen at the contract low of 3,571.75 and then at 3,525.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are firmer in early U.S. trading, on short covering. Prices remain in a seven-week-old downtrend on the daily bar 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 11,136.50 and then at 11,400.00. On the downside, shorter-term support is seen at the contract low of 10,767.25 and then at 10,600.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading. Prices are in a nine-week-old downtrend on the daily bar chart. Bears have the solid 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 125 1/32 and then at this week’s high of 125 26/32. Shorter-term support lies at the contract low of 123 21/32 and then at 123 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are slightly lower in early U.S. trading. Prices are in a nine-week-old downtrend on the daily bar chart. Bears have the solid 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 neutral to bearish early today. Shorter-term resistance lies at this week’s high of 111.22.0 and then at 112.00.0. Shorter-term technical support lies at the contract low of 110.19.0 and then at 110.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The December Euro currency futures are near steady in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a long-term downtrend on the daily bar chart. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is even with 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 this week’s high of .9823 and then at .9867. Shorter-term support is seen at this week’s low of .9718 and then at .9650. 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 bullish early today as the 4-day is above the 9-day and 18-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 Tuesday’s high of $91.35 and then at this week’s high of $93.64. Look for sell stops just below technical support at this week’s low of $87.91 and then at $87.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were steady to weaker in overnight trading. Corn and wheat bulls have the overall near-term technical advantage. Soybean and meal futures bears have the slight chart edge. Grains will continue to look to the outside markets for direction. Keener risk aversion in the marketplace recently has squelched the grain market bulls. On tap today is the monthly USDA supply and demand report.
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