Wednesday, November 6–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed in uneventful trading overnight. U.S. stock indexes are pointed toward steady to slightly higher openings when the New York day session begins.
Trader and investor risk appetite remains upbeat at mid-week, amid no major developments on the U.S.-China trade front and no geopolitical flare-ups. The sense of the marketplace now is that a partial U.S.-China trade deal will be signed soon. The Chinese currency, the yuan, hit a three-month high versus the U.S. dollar this week and dropped back below the key 7-per-dollar level, as Chinese traders also reckon a signed trade deal is close.
In overnight news, the Euro zone October services purchasing managers’ index (PMI) came in at 52.2 versus expectations for a reading of 51.8.
The Euro zone economic workhorse Germany got a better manufacturing report on Wednesday. September manufacturing orders were up 1.3% from August, which handily beat expectations for a rise of just 0.1%. However, manufacturing order in September were down 5.4% from the same time last year.
The key “outside markets” today see the U.S. dollar index weaker. Nymex crude oil prices are near steady and trading around $57.15 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, preliminary productivity and costs, the weekly DOE liquid energy stocks report, and the global services PMI.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are near steady and close to this week’s 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 neutral early today. Today, shorter-term technical resistance comes in at the contract high of 3,085.75 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s 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: 5.0
December Nasdaq index futures: Prices are near steady and close to this week’s 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 neutral early today. Shorter-term technical resistance is seen at the contract high of 8,248.00 and then at 8,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s 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: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer in early U.S. trading on short covering after hitting a seven-week low on Tuesday. Bulls have the overall near-term technical advantage but are fading. 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 early today. Shorter-term technical resistance is seen at 158 16/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 157 25/32 and then at 157 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading after hitting a seven-week low Tuesday. 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 early today. Shorter-term support lies at this week’s low of 128.27.5 and then at 128.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.10.0 and then at 129.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is weaker in early U.S. trading, on a corrective pullback from Tuesday’s good gains. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is even with 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 this week’s high of 97.825 and then at 98.000. Shorter-term support is seen at Tuesday’s low of 97.275 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady in early U.S. trading. Bulls still have momentum on their side. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $57.50 and then at $58.00. Look for sell stops just below technical support at Tuesday’s low of $56.30 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were slightly up overnight, with corn, soybeans and wheat all posting gains of around 1 cent. The grain markets this week are subdued ahead of Friday’s USDA monthly supply and demand report (WASDE). Forecasts for the November WASDE report show US corn average corn yield at 167 bushels per acre compared to 168.4 bushels in the last USDA report. US corn production is seen at 13.6 billion bushels compared to 13.779 in last month’s report. US soybean average yield is forecast at 46.6 bushels per acre compared to 46.9 bushels in the last USDA report. US soybean production is seen at 3.51 billion bushels versus 3.55 billion in last month’s report. Limiting selling interest in grain futures at mid-week are ideas the U.S. and China are moving closer to a trade deal that would include significantly more Chinese purchases of U.S. agricultural products. President Trump this week said a trade deal could be signed in Iowa, right in the middle of the Corn Belt. Limiting buying interest in grain futures is normal commercial seasonal hedge pressure in the corn and soybean futures markets amid the U.S. harvest that has moved well past the half-way point this week.
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