Monday, October 24–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with European shares mostly up and Asian shares mostly down. U.S. stock indexes are pointed to firmer openings when the New York day session begins, following solid gains Friday that came after a Wall Street Journal report suggested the Federal Reserve will slow down the pace of its monetary policy tightening after its November meeting, at which the Fed is expected to raise the Fed funds rate another 0.75%. Stock and financial market bulls are hoping that’s the “Fed pivot” they have been awaiting. There has been scattered talk in the marketplace that certain sectors of financial markets have become strained and much less liquid due to central banks aggressively tightening their monetary policies. It will be another busy week for corporate earnings reports this week.
Asian stock markets sold off as China’s President Xi Jinping tightened his grip on the world’s second-largest economy, following China’s major communist party meeting. It’s likely Xi will continue China’s “zero Covid” policy, which has constrained China’s economy.
The Euro zone got more weak purchasing managers’ data for October. The composite purchasing managers’ index (PMI) for October came in at 47.1 from 48.1 in September. A reading below 50.0 represents contraction in the sector.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are weaker and trading around $84.25 a barrel. The 10-year U.S. Treasury note is presently yielding 4.177%.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the U.S. flash and services purchasing managers’ indexes.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer and hit a two-week high in early U.S. trading. Bears have the overall near-term technical advantage but a two-month-old price downtrend on the daily bar chart has stalled out. 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 even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the October high of 3,819.50 and then at 3,850.00. Support for active traders is seen at the overnight low of 3,736.50 and then at 3,700.00. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are slightly higher and hit a two-week high in early U.S. trading. A two-month-old downtrend on the daily bar chart has stalled out. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 11,530.25 and then at 11,750.00. On the downside, shorter-term support is seen at the overnight low of 11,260.75 and then at 11,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering after hitting a contract low on Friday. Prices are in a 2.5-month-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 bullish early today. Shorter-term technical resistance is seen at Friday’s high of 120 15/32 and then at 122 even. Shorter-term support lies at the overnight low of 118 30/32 and then at the contract low of 118 6/32. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering after hitting a contract low Friday. Prices are in a 2.5-month-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 bullish early today. Shorter-term resistance lies at the overnight high of 110.15.0 and then at 111.00.0. Shorter-term technical support lies at the overnight low of 109.25.0 and then at 109.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are weaker 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 above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the overnight high of .9940 and then at 1.0000. Shorter-term support is seen at .9800 and then at last week’s low of .9745. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $85.85 and then at last week’s high of $87.14. Look for sell stops just below technical support at the overnight low of $82.63 and then at last week’s low of $81.30. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were lower in overnight trading. Corn bulls have the slight overall near-term technical advantage. Wheat and soybean bears have the slight chart edge. Grains will continue to look to the outside markets for direction. Commercial hedge pressure and farmer selling have been squelching corn and soybean bulls, as U.S. harvest of corn and beans is in full swing. However, in the next few weeks harvest will wind down and that will take some seasonal selling pressure off the corn and soybean markets. On tap today is the weekly USDA export inspections 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