Monday, October 14–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker overnight. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. The shine of Friday afternoon’s U.S.-China “Phase 1” trade agreement has quickly worn off. After having the weekend to ponder the matter traders and investors now reckon the agreement is fraught with potholes that are likely derail it. There are now reports China wants more talks before even signing the Phase 1 agreement. “The devil is in the details,” as the saying goes.
Also, the optimism expressed late last week regarding a U.K.-European Union agreement on Brexit has dimmed.
There was more dour economic news coming out of China to start the trading week. China’s exports to the U.S. dropped 22% in September, year-on-year. China’s total exports fell 3.2% in the month. China’s total imports in September were down 8.5%.
Gold prices are posting solid gains Monday, on safe-haven demand amid the dimmer view of last week’s U.S.-China trade talks progress and the weak China economic data.
Nymex crude oil prices are lower and trading around $53.50 a barrel today. The other key “outside market” sees the U.S. dollar index modestly up in early U.S. trading.
There is no major U.S. economic data due for release Monday.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower 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 above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,982.50 and then at last week’s high of 2,994.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 2,941.75 and then at 2,975.00. 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 above 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 the overnight high of 7,894.75 and then at last week’s high of 7,918.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Friday’s low of 7,767.00 and then at 7,700.00. 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 solidly up in early U.S. trading. Bulls had faded last week but still 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 below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 162 even and then at Friday’s high of 162 19/32. Buy stops likely reside just above those levels. Shorter-term support lies at 161 even and then at the overnight low of 160 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are solidly higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at 130.00.0 and then at last week’s low of 129.23.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.19.0 and then at 130.26.0. 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 firmer in early U.S. trading, on a corrective bounce from last week’s solid selling pressure. Bulls still have the 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 and 18-day. The 9-day is above 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 the overnight high of 98.250 and then at Friday’s high of 98.450. Shorter-term support is seen at last week’s low of 97.885 and then at 97.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are solidly lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-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 $54.00 and then at $55.00. Look for sell stops just below technical support at the overnight low of $53.26 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices narrowly mixed overnight. Corn was down 1 to 2 cents, soybeans up around 1 1/2 cents and wheat 1 to 2 cents up. The shine of Friday afternoon’s U.S.-China “Phase 1” trade agreement has quickly worn off. After having the weekend to ponder the matter traders and investors now reckon the agreement is fraught with potholes that are likely derail it. There are now reports China wants more talks before even signing the Phase 1 agreement. “The devil is in the details,” as the saying goes. The weekly USDA crop progress report Monday afternoon is expected to show US corn harvest at 23% complete versus 15% complete last week and 38% last year. US soybean harvest is seen at 25% complete versus 5% last week and 38% last year at this time. A winter storm that hit the US plains and northern Midwest over the weekend, along with freezing temperatures over much of the Corn Belt, will further hamper the U.S. corn and soybean harvest, which is already behind schedule. Recent price action in corn, wheat and soybeans suggests harvest lows are in place and that prices can trend sideways-to-higher into the end of the year.
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