Friday, October 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight, still pressured by rising world government bond yields. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Chinese markets have been closed all week for a public holiday.
Traders are awaiting this morning’s U.S. Labor Department Employment Situation Report for September—arguably the most important U.S. data point of the month. The key non-farm payrolls number is expected to come in up 180,000. However, Wednesday’s U.S. ADP national employment report for September showed a gain of 230,000 jobs, which hints that Friday’s employment report will come in hotter than expected, which if is the case would likely further stoke U.S. bond yields. The U.S. wage-growth figure will also be closely watched, to see if the annual pace moves above 3.0%, as it was 2.9% in the August report.
The U.S. Treasury 10-year note yield rose to a seven-year high above 3.20% this week. Strong U.S. economic data recently is driving U.S. bond and note prices lower.
The key outside markets today find the U.S. dollar index firmer. Meantime, November Nymex crude oil prices are firmer and trading just below $75.00 a barrel.
Other U.S. economic data due for release Friday includes the international trade report and consumer credit.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading. The bulls have the firm overall near-term technical advantage, but solid follow-through selling pressure today, including a bearish weekly low close, would begin to hint a market top is in place. 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 bearish early today. Today, shorter-term technical resistance comes in at overnight high of 2,915.50 and then at Thursday’s high of 2,926.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,887.75 and then at 2,875.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index December futures: Prices are slightly lower in early U.S. trading. Bulls have the firm overall near-term technical advantage, but solid follow-through selling pressure today, including a bearish weekly low close, would begin to hint a market top is in place. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,540.00 and then at 7,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,456.50 and then at 7,400.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today and not far above Thursday’s contract low. Bears have the solid overall near-term technical advantage as an accelerating five-week-old downtrend is in place on the daily chart. 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 Thursday’s high of 138 9/32 and then at 139 even. Buy stops likely reside just above those levels. Shorter-term support lies at contract low of 137 8/32 and then at 137 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are weaker in early U.S. trading. Bears the solid overall near-term technical advantage. Prices are in an accelerating five-week-old downtrend on the daily bar chart. 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 bearish early today. Shorter-term resistance lies at Thursday’s high of 118.01.0 and then at 118.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the contract low of 117.19.5 and then at 117.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly firmer in early U.S. trading. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 95.780 and then at 96.000. Shorter-term support is seen at 95.190 and then at 95.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are modestly up in early U.S. trading. The bulls have the solid overall near-term technical advantage. 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 to bearish early today. Look for buy stops to reside just above technical resistance at $76.00 and then at the contract high of $76.90. Look for sell stops just below technical support at $73.88 and then at this week’s low of $72.95. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were slightly up overnight. Heavy rains expected over the U.S. Corn Belt in the coming days will delay corn and soybean harvest, and that’s friendly for those market prices. Grain market bulls got some more bullish news with the new U.S.-Mexico-Canada trade agreement reached earlier this week. Market bottoms look to be in place for all three major grain markets.
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