Friday, November 9–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on another corrective pullback from Wednesday’s solid gains.
Global investors are spooked by the big drop in crude oil prices the past few weeks. Some are saying the oil market is now in a bear market as prices have dropped 20% from their peak. Nymex crude oil prices are lower again today, hit a seven-month low and are now trading below $60.00 a barrel. The severely down-trending crude oil market is also a bearish element for most of the raw commodity sector.
Part of the weakness in oil prices late this week could be coming from reports Saudi Arabia is studying the feasibility of dissolving the OPEC oil cartel. Reports this week said the U.S. is now pumping around 11.5 million barrels of oil a day. Indeed, OPEC is nowhere near the world power player in the oil market that it was even 10 years ago.
Despite some upbeat economic data from China on Thursday, Asian markets are still worried about the overall health of the world’s second-largest economy. Reports today said Chinese auto sales fell 12% in October, from a year ago.
The U.S. economic highlight of the day Friday will be the producer price index report for October, which is forecast at up 0.3% from September. Worldwide inflation has generally been creeping higher in recent months, although not yet deemed problematic.
The other key “outside market” today finds the U.S. dollar index slightly higher. The USDX has backed down from its 16-month high scored last week, but the greenback bulls still have the solid overall near-term technical advantage.
Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey and monthly wholesale trade.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower on more of a corrective pullback after hitting a three-week high on Thursday. 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 this week’s high of 2,818.00 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,775.00 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index December futures: Prices are lower in early U.S. trading, on a corrective pullback after hitting a three-week high on Thursday. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 7,166.25 and then at 7,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,050.00 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer in early U.S. trading today, on short covering. Prices hit a four-week low Wednesday. Bears have the firm overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 137 24/32 and then at this week’s high of 138 3/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 137 even and then at this week’s low of 136 24/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are higher in early U.S. trading, on short covering. Prices Thursday hit a four-week low. 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 early today. Shorter-term resistance lies at 118.00.0 and then at this week’s high of 118.08.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 117.22.5 and then at 117.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher in early U.S. trading today. Bulls have the firm 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. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.760 and then at the contract high of 96.980. Shorter-term support is seen at the overnight low of 96.455 and then at 96.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
December Nymex crude oil prices are lower and hit another seven-month low in early U.S. trading. Bears are in solid near-term technical control. There are no early clues that a market bottom is close at hand. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 $60.00 and then at $61.00. Look for sell stops just below technical support at the overnight low of $59.28 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were lower overnight, on spillover selling pressure from the big drop in oil prices. Thursday’s monthly USDA supply and demand report was a mixed bag for the grains. The grain market bears still have the overall near-term technical advantage.
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