Tuesday, October 8–Jim Wyckoff’s Morning Markets Report
Asian stocks were mostly higher overnight, while European shares were mostly lower. The U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Global stock markets are still a bit wobbly, what with geopolitical issues lingering not far from the front burner of the marketplace, and which could flare up at any time. These include U.S.-Iran tensions, Brexit, Hong Kong civil unrest and the Democrats working to impeach Trump.
As the U.S.-China trade talks get under way this week, the U.S. has just blacklisted 28 Chinese entities due to those firm purportedly repressing Muslims in China. Ideas are mixed on the outcome of this latest round of meetings between the world’s two largest economies. The Chinese may think they can leverage President Trump’s political problems in the U.S. to their advantage. However, Trump has “doubled-down” and said the U.S. will get a good and complete trade deal with China, or none at all.
In overnight news, a manufacturing report out of Germany was upbeat, finally, as industrial output in August was up 0.3% from July.
Nymex crude oil prices are slightly down and trading around $52.50 a barrel today. The other key “outside market” sees the U.S. dollar index slightly down in early U.S. trading.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the producer price index, and the IBD/TIPP economic optimism index. Several Federal Reserve officials speak today, including Fed Chairman Powell to the NABE annual meeting.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. There is very strong overhead resistance at the recent highs, scored in July and September. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,950.00 and then at Monday’s high of 2,959.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,900.00 and then at 2,875.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index futures: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with 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 7,750.00 and then at Monday’s high of 7,799.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,682.50 and then at last Friday’s low of 7,624.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Monday’s high of 165 7/32 and then at 165 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 164 3/32 and then at the overnight low of 163 18/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at Monday’s low of 131.13.0 and then at the overnight low of 131.06.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at last week’s high of 132.01.0 and then at 132.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly down in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.730 and then at 99.000. Shorter-term support is seen at last week’s low of 98.300 and then at 98.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. Prices are in a steep near-term downtrend. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.27 and then at Monday’s high of $54.06. Look for sell stops just below technical support at $52.00 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mixed again in overnight trading. Corn was up around 1/2 cent, soybeans down 1 cent and wheat around 1 1/2 cents lower. There are two big events in the grain markets later this week: the USDA monthly supply and demand report out Thursday morning. There is no clear consensus regarding what the USDA will do regarding the size of the US corn and soybean crops, especially after the agency last week made surprising cuts to US corn and soybean stockpiles. The second is a major snowstorm and cold weather forecast to hit the northern plains and northern Corn Belt late Thursday and into Saturday. This storm will end the growing season for crops in that region. Corn and soybean harvest is already behind due to recent wet weather and the late planting in the springtime. This is a bullish element for the grains that could become more significantly bullish in the coming several days. The U.S.-China trade talks restarted in Washington, D.C. this week, and will be closely watched. While there is no consensus on whether this latest round of discussions will make any progress toward a trade agreement, most grain traders are doubtful of any break-through deal. China has been buying U.S. soybeans recently.
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