Wednesday, October 11–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. U.S. stock indexes are at or near record highs. Japan’s Nikkei stock index hit a 21-year high overnight.
Gold prices are slightly lower in pre-U.S.-session trading, on a corrective pullback from good gains scored this week.
While gold has seen some safe-haven demand this week, amid geopolitical tensions that include the U.S.-North Korea stand-off and a region of Spain wanting to secede, the world stock markets are not exhibiting much risk aversion at all.
In overnight news, the German government forecast its economic growth at 2.0% for 2017 and at 1.9% for 2018.
The U.S. dollar index is weaker again in early U.S. trading Wednesday. The greenback continues this week’s slide. The other key outside market sees Nymex crude oil futures prices firmer and trading above $51.00 a barrel.
Traders and investors are awaiting what is arguably the most important U.S. data point of this week: Wednesday afternoon’s minutes from the latest FOMC meeting. Most of the marketplace now expects the Federal Reserve to raise interest rates by 0.25% at the December FOMC meeting. Any FOMC minutes wording on inflation and the U.S. labor market will be parsed by market watchers.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly lower in early U.S. trading, on mild profit taking after hitting a contract and record high on Tuesday. The market is still way overbought and due for a decent downside correction very soon. The 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 is above 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 contract high of 2,553.25 and then at 2,565.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,539.25 and then at 2,525.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are near steady and very close to Tuesday’s contract and record high. 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 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 6,088.50 and then at 6,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 6,039.00 and then at 6,025.00. 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 slightly lower in early U.S. trading. Prices are still in a four-week-old downtrend on the daily bar chart. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 153 2/32 and then at 153 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 151 28/32 and then at last week’s low of 151 7/32 even. 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. Bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. 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 bullish early today. Shorter-term resistance lies at this week’s high of 125 14/32 and then at 125.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.00.0 and then at last week’s low of 124.22.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. Bulls are fading this week. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is even with 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 this week’s high of 93.670 and then at last week’s high of 94.100. Shorter-term support is seen at the overnight low of 92.880 and then at 92.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are higher in early U.S. trading. Bulls have regained the slight overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $52.00 and then at $52.50. Look for sell stops just below technical support at the overnight low of $50.86 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were weaker overnight. Rains in the Corn Belt will slow down harvest the next couple days. Soybean bulls and bears are on a level overall near-term technical playing field. Wheat and corn bears have the firm chart advantage at present. However, I do not think there is much, if any, downside left in the grains following the selling pressure in recent months.