Tuesday, October 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. The U.S. stock indexes are pointed to firmer openings when the New York day session begins, after suffering losses Monday. The U.S. stock indexes have hit three-month lows recently are now trending down on a near-term basis (daily charts). There are still risk-off attitudes in the marketplace early this week. Another Chinese property firm, Fantasia Group Holdings, missed a debt payment this week. Fantasia is not as big as the troubled Evergrande property firm, but there are growing concerns about a contagion effect in the financial markets. There are lingering worries about supply-chain bottlenecks that have many businesses unable to obtain their products in a timely fashion. That matter and rapidly rising energy prices have helped to stoke price inflation fears and even notions of a return of “stagflation” that gripped world economies in the early 1980s.
In other overnight news, the Euro zone reported its August producer prices up 1.1% from July and up 13.4%, year-on-year. Those numbers were in line with market expectations but are certainly “hot” inflation readings compared to recent years.
Australia’s central bank left its interest rates unchanged at its regular monetary policy meeting Tuesday, including keeping in place its bond-buying program. The bank said it won’t raise interest rates before 2024.
The key outside markets today see the U.S. dollar index modestly up. Nymex crude oil futures are slightly up and trading around $78.00 a barrel after hitting a nearly seven-year high on Monday. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.496%.
U.S. economic data due for release Tuesday includes the weekly chain store and Johnson Redbook retail sales reports, the international trade report, the U.S. and global services PMIs, the ISM report on business services, and the IDB/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in early U.S. trading, on a corrective bounce after Monday’s losses. 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 Monday’s high of 4,362.00 and then at 4,389.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the September low of 4,293.75 and then at 4,250.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly up in early U.S. trading, on tepid short covering. 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 Monday’s high of 14,835.00 and then at 14,926.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at Monday’s low of 14,367.75 and then at 14,200.00. Sell stops likely reside just below those levels. 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. 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 Monday’s high of 160 20/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 159 15/32 and then at 159 even. 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. 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 neutral to bearish early today. Shorter-term resistance is seen at the overnight high of 132.04.5 and then at Monday’s high of 132.08.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.24.0 and then at 131.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are down in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below 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 Monday’s high of 1.1656 and then at 1.1690. Buy stops likely reside just above those levels. Shorter-term support is seen at the September low of 1.1578 and then at 1.1550. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher and hit a seven-year high in early U.S. trading. Bulls are in solid technical control. 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 $79.00 and then at $80.00. Look for sell stops just below technical support at the overnight low of $77.47 and then at $76.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures were weaker overnight. Harvesting of the U.S. corn and soybean crops is progressing rapidly and that’s bearish (commercial hedge pressure). The corn and soybean market bears have the near-term technical advantage, while the wheat bulls have the firm near-term technical advantage.
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