Wednesday, October 27–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker in overnight trading. The U.S. stock indexes are pointed to slightly lower openings when the New York day session begins. The major U.S. stock indexes this week have hit record highs. The indexes have made impressive recoveries from their early-October lows. Traders and investors remain upbeat amid third-quarter corporate earnings reports that are mostly beating market expectations. There are storm clouds on the horizon, however. China’s economic growth has slowed as the world’s second-largest economy deals with an overheating housing sector, resurgent Covid-19 cases in some regions, and an energy crisis that has produced shortages of some key raw materials—not only in China but also in nations that China supplies with those materials.
Tensions between the U.S. and China have up-ticked at mid-week, following reports the U.S. banned China’s biggest telecommunications operator, China Telecom, from doing business in the U.S.
The key outside markets today see the U.S. dollar index slightly up. Crude oil prices are lower and trading around $83.60 a barrel. Meantime, the 10-year U.S. Treasury note yield is presently fetching 1.591%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, the advance economic indicators report, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading, on mild profit taking after hitting a record high on Tuesday. Bulls have the solid overall near-term technical advantage as prices are trending up. 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 4,590.00 and then at 4,600.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,522.50 and then at 4,500.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are weaker on profit taking. 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 overnight high of 15,592.75 and then at the contract high of 15,702.25. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 15,295.75 and then at 15,150.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher 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 bullish early today. Shorter-term technical resistance is seen at 160 even and then at the October high of 160 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 24/32 and then at Tuesday’s low of 158 8/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are up in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance is seen at 130.28.0 and then at 131.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 130.08.0 and then at last week’s low of 129.31.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The December Euro currency futures are slightly lower in early U.S. trading. Bears have the firm overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the October high of 1.1681 and then at 1.1700. Buy stops likely reside just above those levels. Shorter-term support is seen at 1.1584 and then at the October low of 1.1537. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are lower in early U.S. trading. Bulls still have the solid near-term technical advantage. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $84.51 and then at this week’s high of $85.41. Look for sell stops just below technical support at the overnight low of $83.11 and then at $82.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were lower again overnight. Not much new at mid-week. Corn and soybean bulls have gained some momentum recently, while wheat bulls have the firm overall near-term technical advantage. Commercial hedge pressure in soybeans and corn has peaked and is on the decline. Focus will turn to the demand side of the ledger as the U.S. harvest starts to wind down.
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