Wednesday, September 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight. U.S. stock indexes are also pointed toward modestly higher openings when the New York day session begins. Federal Reserve Chair Janet Yellen delivered a speech Tuesday that sounded an arguably hawkish tone on U.S. monetary policy, and an upbeat tone on the U.S. economy. The world equity markets took this as a positive sign that a strengthening U.S. economy and rising inflation will help the other major industrialized countries’ economic growth prospects, as well as reignite some wanted inflation.
Gold prices are lower in pre-U.S.-day-session trading Wednesday. The surging U.S. dollar this week is a bearish element for the precious metals markets, as well as other raw commodity markets.
The U.S. dollar bulls are on a roll this week, as the U.S. dollar index is higher and hit a five-week high overnight. A bullish head-and-shoulders bottom reversal pattern has formed on the daily bar chart for the USDX, which is a technical clue that a market bottom is in place.
Meantime, the Euro currency hit a five-week low against the U.S. dollar Wednesday. There are chart clues the Euro has put in a near-term market top.
The other key outside market on Wednesday morning sees Nymex crude oil futures slightly lower after hitting a four-month high Tuesday. The oil bulls have the near-term technical advantage and still have some momentum. However, there are stiff chart resistance levels just overhead in the crude oil market.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, pending home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are firmer in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-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 2,507.25 and then at 2,515.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,485.00 and then at 2,475.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index December futures: Prices are slightly higher in early U.S. trading today. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 5,925.00 and then at this week’s high of 5,954.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,886.50 and then at Tuesday’s low of 5,862.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are solidly lower and hit a five-week low in early U.S. trading. Bears have gained momentum. 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 to bearish early today. Shorter-term technical resistance is seen at 154 even and then at the overnight high of 154 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 12/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are solidly lower and hit a seven-week low in early U.S. trading. Bears have gained downside momentum. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 125.24.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.14.0 and then at 125.08.0. 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 higher and hit a five-week high in early U.S. trading. Green back bulls have momentum. The shorter-term moving averages for the dollar index 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 93.305 and then at 93.500. Shorter-term support is seen at the overnight low of 92.810 and then at 92.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady in early U.S. trading. Bulls have the overall near-term technical advantage after prices hit a four-month high on Tuesday. Look for buy stops to reside just above technical resistance at this week’s high of $52.43 and then at $53.00. Look for sell stops just below technical support at $51.00 and then at this week’s low of $50.39. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were weaker overnight. The strong U.S. dollar is working against the grain bulls this week. Also, U.S. harvest is picking up speed rapidly and will in full swing by the end of this week. Harvest hedge pressure will make it tough for corn and soybeans to make significant upside headway in the coming weeks.