Thursday, September 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher overnight, in the wake of an upbeat assessment of the U.S. economy from the Federal Reserve on Wednesday. U.S. stock indexes are pointed toward slightly lower openings when the U.S. day session begins. U.S. stock indexes are near their recent record highs.
Gold prices are solidly lower and have hit a three-week low following the hawkish Fed meeting this week and the “risk-on” trader and investor attitudes at present.
World markets are still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that ended Wednesday with Fed Chair Janet Yellen’s press conference. The Fed did not raise interest rates but did announce that in October it will start reducing its big balance sheet of U.S. securities. The aforementioned moves were not surprising. What is surprising was the Fed’s upbeat tone on the U.S. economy despite two major hurricanes that just hit the U.S. mainland. A December interest rate hike remains on the table and the Fed also wants to raise interest rates three times in 2018.
The U.S. dollar rallied strongly on the hawkish Fed stance, while U.S. Treasury prices sold off. U.S. stock indexes ended the day mixed Wednesday.
In overnight news, Standard & Poors lowered China’s sovereign credit rating due to that country’s debt levels. It was the first S&P downgrade of China’s credit rating since 1999.
The Bank of Japan Thursday left its monetary policy unchanged at the regular BOJ meeting. No changes in policy were expected.
The key outside markets on Thursday morning see the U.S. dollar index slightly weaker after Wednesday’s strong gains. Meantime, Nymex crude oil futures are weaker this morning. The oil bulls have the slight near-term technical advantage as prices hover just above $50 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, the monthly house price index, and leading economic indicators.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are near steady in early U.S. trading, and near this week’s contract and record high. 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 with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 2,507.25 and then at 2,515.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,494.00 and then at 2,487.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index December futures: Prices are slightly lower in early U.S. trading today. Prices are not far below this month’s 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 6,000.00 and then at this week’s high of 6,018.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,963.75 and then at this week’s low of 5,930.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are near steady in early U.S. trading. Bulls have lost their overall near-term technical advantage amid the recent sell off. 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 bearish early today. Shorter-term technical resistance is seen at 154 even and then at Wednesday’s high of 154 14/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 153 16/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls have lost their overall near-term technical advantage amid the recent sell off. 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 bearish early today. Shorter-term resistance lies at 125.25.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 125.17.0 and then at 125.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading, on a corrective pullback from Wednesday’s strong gains. Bears still have the overall near-term technical advantage. However, more strength in the dollar index this week would hint at a market bottom being in place. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 92.495 and then at 92.750. Shorter-term support is seen at 92.000 and then at 91.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. Bulls have the overall near-term technical advantage. Prices Wednesday hit a four-month high. Look for buy stops to reside just above technical resistance at Wednesday’s high of $50.79 and then at $51.00. Look for sell stops just below technical support at $50.00 and then at this week’s low of $49.68. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were weaker overnight. Traders will closely examine this morning’s weekly USDA export sales report. Corn bulls are fading again this week, while wheat and soybean bulls are faring better. This suggests more choppy and sideways trading in the grains for the near term.