Thursday, November 7–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up overnight. U.S. stock indexes are pointed toward higher openings and more record highs when the New York day session begins.
Trader and investor risk appetite remains elevated as the news from the U.S.-China trade front remains very upbeat. Reports from China Thursday said both countries have agreed to remove their tariffs in tranches. The report said tariffs would be eliminated once the “Phase 1” partial trade deal is signed. There has been no official word from the U.S. on this development. While it is a positive, the trade deal still has to be signed. And remember, the trade negotiations between the world’s two largest economies have been a continuously up-and-down affair regarding progress. Given this history it seems unlikely both nations will now just cruise to the finish line with a trade deal.
The Chinese yuan continued to strengthen against the U.S. dollar on the trade-deal optimism.
The Bank of England is holding its regular monetary policy meeting Thursday, but no change in interest rates is expected.
In other overnight news, the European Union lowered Euro zone economic growth in 2019 to 1.1% from 1.2% previously forecast. The EU sees 2020 and 2021 growth at 1.2%.
The key “outside markets” today see the U.S. dollar index weaker. Nymex crude oil prices are higher and trading around $57.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, consumer credit and the monthly chain store sales index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit new contract and record highs in early U.S. trading. Bulls have the solid overall near-term technical advantage to suggest more upside in the near term. 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 to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,092.50 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,063.00 and then at 3,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are higher and hit new contract and record highs in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside in the near term. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 8,263.75 and then at 8,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,200.00 and then at this week’s low of 8,161.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly lower and hit a seven-week low in early U.S. trading. Bulls have lost their overall near-term technical advantage amid a four-week-old downtrend in place 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 bearish early today. Shorter-term technical resistance is seen at 158 even and then at 158 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 157 even and then at 156 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
December U.S. T-Notes: Prices are solidly lower in early U.S. trading and hit a seven-week low. Bulls have lost their chart advantage amid a four-week-old downtrend in place. 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 bearish early today. Shorter-term support lies at the September low of 128.16.0 and then at 128.10.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.00.0 and then at 129.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly down in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 with 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 the overnight high of 97.850 and then at 98.000. Shorter-term support is seen at Tuesday’s low of 97.275 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are higher in early U.S. trading. Prices are still in a four-week-old uptrend on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $57.85 and then at $58.00. Look for sell stops just below technical support at this week’s low of $55.83 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mostly up overnight, with corn gaining around 1 cent, soybeans up 3 to 4 cents and wheat 1 cent lower to 3 cents higher. Grain bulls are cheered Thursday as the news from the U.S.-China trade front remains very upbeat. Reports from China Thursday said both countries have agreed to remove their tariffs in tranches. The report said tariffs would be eliminated once the “Phase 1” partial trade deal is signed. There has been no official word from the U.S. on this development. While it is a positive, the trade deal still has to be signed. And remember, the trade negotiations between the world’s two largest economies have been a continuously up-and-down affair regarding progress. Given this history it seems unlikely both nations will now just cruise to the finish line with a trade deal. Traders will closely examine this morning’s weekly UDSA exports sales report for the grains. Recent U.S. sales and shipments of grains have been tepid. Traders are specifically looking to the export sales data for significantly more demand coming from China, as President Trump has promised would occur. Traders are awaiting Friday’s USDA monthly supply and demand report (WASDE). Forecasts for the November WASDE report show US corn average corn yield at 167 bushels per acre compared to 168.4 bushels in the last USDA report. US corn production is seen at 13.6 billion bushels compared to 13.779 in last month’s report. US soybean average yield is forecast at 46.6 bushels per acre compared to 46.9 bushels in the last USDA report. US soybean production is seen at 3.51 billion bushels versus 3.55 billion in last month’s report. Limiting price gains in grain futures recently has been normal commercial seasonal hedge pressure in the corn and soybean futures markets amid the U.S. harvest that has moved well past the half-way point this week.
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