Monday, September 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is very keen in the marketplace to start the trading week, following the weekend terrorist drone attacks on Saudi Arabian oil installations that have quickly taken nearly 6 million barrels a day of oil production off the market. That amounts to about 5% of world crude oil production. The U.S. has blamed Iranian-backed terrorists and Iran, itself. President Trump said the U.S. is “locked and loaded” to respond to the situation.
Safe-haven assets like gold, silver, the U.S. dollar, U.S. Treasuries and the Japanese yen are all in rally mode Monday.
Nymex crude oil prices are sharply higher and trading up around $4.50 a barrel near $59.50. October Nymex crude oil futures hit a high of $63.34 overnight. Brent crude oil jumped to a high of $71.95 a barrel, up nearly 20%, at one point in early trading Monday, but prices have backed well down from that level. President Trump has authorized the release of oil from the U.S. strategic petroleum reserve, which totals more than 600 million barrels. This is the biggest geopolitical flashpoint to impact the world marketplace in quite some time.
Sharply higher oil prices may throw a monkey wrench into central banks’ monetary policies, which had heretofore been leaning very easy. Sharply higher oil prices immediately raise the specter of rising inflation, which could hamstring central banks’ monetary policy easing in efforts to jumpstart global economic growth. The Federal Reserve’s FOMC meets this week and is expected to slightly lower U.S. interest rates.
There was also violence in Hong Kong over the weekend as the civil unrest there has escalated. However, the drone strikes in Saudi Arabia have overshadowed this news.
There was also weak industrial output data coming out of China Monday, continuing a string of downbeat economic numbers coming out of the world’s second-largest economy.
U.S. economic data due for release Monday is light and includes the Empire State manufacturing survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still 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 bearish early today. Today, shorter-term technical resistance comes in at 3,005.75 and then at the contract high of 3,032.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,983.50 and then at 2,973.75. 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. Bulls still have the solid overall technical advantage. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 7,904.00 and then at 7,978.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,798.25 and then at 7,750.00. 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 higher in early U.S. trading. Still, bulls have faded badly recently. 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 159 15/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 30/32 and then at last week’s low of 157 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are still 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 bullish early today. Shorter-term support lies at the overnight low of 128.24.0 and then at 128.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.07.0 and then at 129.12.0. 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. 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 even with the 9-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 98.225 and then at 98.500. Shorter-term support is seen at last week’s low of 97.560 and then at 97.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are sharply higher in early U.S. trading and spiked to a nearly four-month high overnight. Prices have backed well down from the overnight highs, however. Bulls have gained the overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. 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 to bullish 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 $58.77 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
US grain futures prices were near steady in overnight trading. Both the grain market bulls and bears are presently being squelched by the geopolitical uncertainty I the marketplace following the terrorist drone strikes against Saudi Arabia over the weekend, and the potential for retaliation from the Saudis and even the U.S. against Iran. Still selling interest in the grains is limited by last week’s conciliatory comments from China and the U.S. on their trade war. Trading psychology in the grain markets appears to be changing from bearish to at least neutral, following last week’s gains in futures. It’s likely the big
speculative “fund” traders in grain futures, who have been heavily short, have run out of gas and are looking to bail out of their short positions (short covering). Weather in the US Midwest remains warm and non-threatening for the corn and crops. It appears the corn and soybean crops will escape a killing hard frost early this fall. On tap Monday is the weekly USDA export inspections report. Demand for US grains needs to pick up on the world market before US grain prices can sustain price uptrends on the charts.
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