Monday, November 4–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up in trading overnight. U.S. stock indexes are pointed toward higher openings and new all-time highs when the New York day session begins.
Trader and investor risk appetite remains upbeat at present, amid no major geopolitical hotspots that are flaring up to rattle the world marketplace. Adding to upbeat attitudes are the latest reports on the U.S.-China trade front that say a partial deal is close to being signed.
China is set to launch new cryptocurrency backed by gold, reports over the weekend said. Said one analyst: “It may take some time for the investing public to trust China’s backing of the new gold cryptocurrency.
In other news, the Euro zone reported its October manufacturing purchasing managers’ index (PMI) was 45.9 versus 45.6 in September and expectations for an October reading of 45.7. A reading below 50.0 suggests contraction in the sector. The German manufacturing PMI was reported at 42.1 in October.
The key “outside markets” find Nymex crude oil prices firmer in early U.S. trading today and trading around $56.80 a barrel. Meantime, the U.S. dollar index is slightly up.
U.S. economic data due for release Monday includes the ISM New York report on business, the employment trends index, the global manufacturing PMI, and manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit a new contract and record high in early U.S. trading. Bulls have the solid overall near-term technical advantage to suggest more upside in the near term. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,080.00 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,064.75 and then at 3,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.0
December Nasdaq index futures: Prices are higher and hit a new contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside in the near term. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the contract high of 8,218.25 and then at 8,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,164.00 and then at 8,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the overall near-term technical advantage but trading is choppy. 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 technical resistance is seen at the overnight high of 160 26/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 27/32 and then at 159 16/32. 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 support lies at the overnight low of 129.22.5 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.02.5 and then at 130.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly up in early U.S. trading. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Friday’s high of 97.265 and then at 97.500. Shorter-term support is seen at the October low of 96.885 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are up and hit a six-week high in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below 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 $57.50 and then at $58.00. Look for sell stops just below technical support at the overnight low of $55.83 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures prices were mixed to weaker overnight. Corn was down around 3 cents, soybeans up around 1 cent and wheat down around 4 cents. The grain market bulls have stalled recently amid a lack of fresh, bullish fundamental news. Seasonal commercial hedging pressure in the futures market is featured amid farmer selling during the corn and soybean harvest. However, selling interest is limited by less-than-ideal Midwest harvest conditions this fall and on the latest reports the US-China trade talks are nearing a partial agreement being signed. Still, the most important thing for grain traders is to see actual US grain sales to China being confirmed. Recent US export sales data has not shown big China purchases of US ag products. Monday afternoon’s USDA weekly crop progress report is expected to show US corn harvest at 58% complete versus 41% last week and 74% at the same time last year. US soybean harvest is seen at 77% done compared to 62% last week and 81% last year. Trading in US grain futures may be more subdued this week, heading into Friday’s (November 8) USDA monthly supply and demand (WASDE) report. That report will likely be the major data point for the grain markets for the month of November. Most look for the government to reduce the overall size of the U.S. corn and soybean harvest due to the less-than-ideal fall weather. USDA late last week released its baseline projections for the grains next year. US corn planted acreage is seen at 94.5 million, with harvested acres of 87.1 million. A national average corn yield of 178.5 bu. per acre would produce a crop of 15.545 billion bushels. Price: $3.40 per bushel. US soybeans planted acreage is 84.0 million, with harvested acres at 83.2 million. A national average bean yield of 50.5 bu. per acre would result in a crop of 4.200 billion bushels. Price: $8.85 per bushel. US all wheat planted acreage is seen at 45.0 million, with harvested acres at 38.1 million. A national average yield of 48.2 bu. per acre would produce a crop of 1.836 billion bushels. Price: $4.80 per bushel.
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