U.S. Stocks Boosted by U.S.-Canada Trade Agreement

Monday, October 1–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Reports of a U.S.-Canada trade deal over the weekend have boosted U.S. equities. Chinese markets are closed until Friday for a public holiday.

Reports from China on Sunday said the U.S.-China trade war is taking a toll on China’s manufacturing sector, which has reduced its overall production. The Caixin manufacturing purchasing managers index (PMI) fell to 50.0 in September from 51.0 in August—ending 15 straight months of expansion.
This is leading to speculation China’s monetary officials could act to stimulate the economy, including devaluing its currency, the yuan, on the world foreign exchange market.

In other overnight news, the Euro zone jobless rate was reported at 8.1% in August versus 8.2% in July.

Focus in Europe is still on the new anti-establishment Italian government’s economic plan to address its fiscal and financial problems. The Euro currency has been pressured by this matter, which could be the next flash point in the currency and financial markets.

The key outside markets today find the U.S. dollar index slightly lower. Meantime, November Nymex crude oil prices are slightly higher and trading around $73.50 a barrel. Nymex crude prices are at contract and eight-month highs. Brent crude oil futures are at a four-year high.

U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers’ index, construction spending, the ISM report on business manufacturing, and the global manufacturing PMI.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are higher and back near the contract and record highs in early U.S. trading. The bulls have the solid overall near-term technical advantage. The 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 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 contract high of 2,947.00 and then at 2,960.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,922.50 and then at last week’s low of 2,907.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5

December Nasdaq index December futures: Prices are higher and near the contract and record high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 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 7,723.50 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,670.75 and then at 7,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are lower and near the recent four-month low in early U.S. trading Monday. Bears have the overall near-term technical advantage as a five-week-old downtrend is in place on the daily chart. 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 140 even and then at the overnight high of 140 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 139 24/32 and then at the September low of 139 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

December U.S. T-Notes: Prices are lower and not far above the recent four-month low. Bears have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. 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 bullish early today. Shorter-term resistance lies at the overnight high of 118.23.5 and then at last week’s high of 119.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.16.5 and then at the September low of 118.11.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The December U.S. dollar index is slightly higher in early U.S. trading. A five-week-old downtrend on the daily bar chart was soundly negated late last week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 94.985 and then at the September high of 95.280. Shorter-term support is seen at the 94.550 and then at 94.250. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

November Nymex crude oil prices are firmer and not far below Friday’s contract high in early U.S. trading. The bulls have the solid overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-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 the contract high of $71.73 and then at $72.00. Look for sell stops just below technical support at $73.00 and then at $72.50. Wyckoff’s Intra-Day Market Rating: 6.0

GRAINS

Grain futures prices were narrowly mixed overnight. Grain market bears have the overall near-term technical advantage and gained some downside technical momentum late last week. U.S. corn and soybean harvest pressure is progressing, so look for farmer selling pressure to limit the upside.

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