Wednesday, September 14–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight, following the rout on Wall Street Tuesday that saw the S&P 500 index post its biggest daily drop in over two years. U.S. stock indexes were pointed to firmer openings when the New York day session begins. Tuesday’s hotter-than-expected U.S. consumer price index report “wrong-footed” the marketplace that had been expecting tamer inflation readings. The U.S. dollar index and Treasury yields spiked higher and crude oil sold off on the CPI data, amid ideas the Federal Reserve will have to maintain its aggressive monetary policy stance for longer, in order to tamp down the problematic price inflation.
On tap today is the U.S. producer price index report for August, which is expected to come in down 0.1% from July and follows the July PPI reading of down 0.5%. After the CPI report, the marketplace is now worried the PPI report will also show a higher-than-expected inflation print.
In overnight news, the Euro zone reported its industrial production in July was down more than expected, at -2.3% from June and -2.4%, year-on-year.
In other news the International Energy Agency lowered global crude oil demand by 100,000 barrels per day in 2022, to 2 million bpd.
The key outside markets today see Nymex crude oil prices firmer and trading around $87.50 a barrel. The U.S. dollar index is lower in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 3.447%.
Other U.S. economic data due for release Tuesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading, on a tepid short-covering bounce after Tuesday’s big losses. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 4,000.00 and then at 4,050.00. Support for active traders is seen at Tuesday’s low of 3,938.50 and then at the September low of 3,900.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly higher in early U.S. trading on a tepid corrective bounce. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above 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 12,300.00 and then at 12,500.00. On the downside, shorter-term support is seen at Tuesday’s low of 12,082.25 and then at the August low of 11,996.50. 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 six-week-old downtrend on the daily bar chart and bears have the solid advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 132 9/32 and then at 133 even. Shorter-term support lies at this week’s low of 131 4/32 and the at the June low of 130 27/32. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and hit a contract low in early U.S. trading. Prices are in a six-week-old downtrend on the daily bar chart and 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 115.02.5 and then at 115.16.0. Shorter-term technical support lies at the overnight contract low of 114.21.5 and then at 114.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are higher in early U.S. trading. Bears still have the firm overall near-term technical advantage but a price downtrend has stalled out. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above 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 bullish early today. The Euro currency finds shorter-term technical resistance at 1.0100 and then at 1.0150. Shorter-term support is seen at the overnight low of 1.0026 and then at 1.0000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are slightly higher in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $89.31 and then at $90.00. Look for sell stops just below technical support at this week’s low of $85.06 and then at $84.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures were mixed to firmer overnight. Risk aversion in the marketplace at mid-week has squelched bullish enthusiasm in the grains, for the moment. Corn and soybean market bulls have the near-term technical advantage. Wheat bears still have the overall near-term technical edge, but the bulls are working on fledgling price uptrends. Seasonal factors for corn and soybeans lean bearish as both crops are set for harvest in the U.S., which means farmer selling and commercial hedge pressures.
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