Friday, October 4–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed overnight. U.S. stock indexes are presently pointed toward weaker openings when the New York day session begins. Mainland China markets were closed this week for a holiday. The wobbly U.S. stock market this week still has traders and investors nervous heading into the weekend.
Traders are awaiting Friday’s morning’s U.S. employment situation report for September from the Labor Department. Friday’s key non-farm payrolls number is forecast to be up 145,000 in September. A big miss from the consensus forecast would likely produce some volatile markets action in the immediate aftermath of the report. It would take a significantly stronger-than-expected jobs report today to sway traders and investors away from the general notion that another U.S. interest rate cut is coming from the Federal Reserve soon, following this week’s very poor U.S. and European manufacturing reports.
Reports overnight said Hong Kong authorities have banned people from wearing masks in public, following recent violent protesting there. This new rule could further escalate the civil unrest in Hong Kong. This situation could quickly move to the front burner of the marketplace, especially if mainland China gets more deeply involved in the matter.
The U.S. dollar index is near steady in early U.S. trading. The USDX hit a contract and two-year high earlier this week. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are slightly up and trading around $52.70 a barrel. Oil prices are in a steep slide from the spike high scored in September.
Other U.S. economic data due for release Friday includes the international trade report. Several Federal Reserve officials are scheduled to speak today, including Chairman Jerome Powell.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls have faded this week and it appears the index has topped out for the near term. There is very strong overhead resistance at the recent highs, scored in July and September. The 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 is below 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 overnight high of 2,918.00 and then at 2,935.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,875.00 and then at this week’s low of 2,855.00. 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. Bulls have faded to start the month of October and it appears this index has put in a near-term peak. 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,685.50 and then at 7,730.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,600.00 and then at 7,550.00. 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 firmer in early U.S. trading. Bulls have had a good week amid safe-haven demand and ideas of slowing world economic growth. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 164 31/32 and then at 165 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 164 even and then at Thursday’s low of 163 7/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at the overnight low of 131.20.5 and then at 131.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 131.31.0 and then at 132.08.0. 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 slightly down in early U.S. trading. Prices Tuesday hit a contract and two-year high. Bulls have the solid overall near-term technical advantage. More upside is likely in the near term. 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.600 and then at 99.000. Shorter-term support is seen at this week’s low of 98.300 and then at 98.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly up in early U.S. trading. Prices Thursday hit a nearly two-month low. Bulls have faded badly recently. 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 neutral early today. Look for buy stops to reside just above technical resistance at $53.00 and then at $54.00. Look for sell stops just below technical support at $52.00 and then at this week’s low of $50.99. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were weaker in overnight trading. Bulls have faded late this week, amid apprehension ahead of next week’s USDA monthly supply and demand report on October 10. Corn was down around 2 cents, soybeans down about 2 cents and wheat around 1 cent lower. Weather in the US Midwest leans slightly toward the bullish camp, as heavy rains hit parts of the Corn Belt this week delayed harvesting of the corn and soybean crops and caused some concerns about quality. In wheat, a major snowstorm in the northern US plains and Canadian prairies last weekend has damaged the spring wheat crops in those regions.
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