Friday, November 1–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up in trading overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins.
In overnight news, China’s Caixin manufacturing purchasing managers index (PMI) came in at 51.7 in October versus 51.4 in September and 51.0 forecast. The October reading was the strongest since February of 2017. This news supported buying in equities markets in Asia.
The European Central Bank has a new president starting Friday—Chritine Lagarde, the former director of the International Monetary Fund. Mario Draghi was the previous ECB president.
The marketplace is awaiting the U.S. employment situation report for October from the Labor Department that is due out this morning. That’s arguably the most important U.S. economic report of the month. The key non-farm payrolls number is forecast up a modest 75,000 jobs.
The key “outside markets” find Nymex crude oil prices firmer in early U.S. trading today and trading around $54.50 a barrel. Meantime, the U.S. dollar index is slightly lower.
Other U.S. economic data due for release Friday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, domestic auto industry sales and construction spending.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Price action this week has produced a bullish upside “breakout” above the recent highs, to suggest another leg up in prices. 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 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 3,055.00 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,020.25 and then at 3,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly up in early U.S. trading. Bulls have the solid near-term technical advantage. Prices have this week seen a bullish upside “breakout” above the recent highs. 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 8,141.00 and then at 8,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,020.50 and then at 8,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are modestly weaker in early U.S. trading. Bulls have the overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 161 21/32 and then at 162 even. Buy stops likely reside just above those levels. Shorter-term support lies at 161 even and then at 159 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are weaker 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 early today. Shorter-term support lies at 130.00.0 and then at 129.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 130.13.0 and then at 130.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady 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 Thursday’s high of 97.225 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: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly up 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 neutral early today. Look for buy stops to reside just above technical resistance at Thursday’s high of $55.59 and then at $56.00. Look for sell stops just below technical support at this week’s low of $53.71 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were mixed overnight. Corn was down around 1 1/2 cents, soybeans up around 1 1/2 cents and wheat down around 1 cent. The grain market bulls have faded recently amid a lack of fresh, bullish fundamental news. News late this week the US-China trade talks may have taken a step backwards is limiting buying interest in the grains. However, the U.S. side says the Phase 1 part of the trade deal is still a go. 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. Somewhat limiting losses in the US grain futures markets is continued slow corn and soybean harvest. While rain, snow and cold weather hit the US Midwest this week, drier and still-cold weather for next week should allow good harvesting progress. Trading in US grain futures may be more subdued heading into next 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.
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