Monday, October 22–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight. Asian shares gained overnight, led by China’s stock market rallying more than 4% as Chinese economic officials said they are prepared to stimulate the economy, including cutting personal taxes. European stock markets were also up, but worries remain regarding Italy’s budget problems with the European Union, and with Brexit concerns. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
The U.S.-China trade war remains in focus after Trump administration economic advisor Larry Kudlow said China is doing “nothing” to mitigate the matter. Reports last week said President Trump and Chinese leader Xi Jinping will meet at the G20 conference in Argentina in late November.
Thursday’s European Central Bank regular monetary policy meeting will be closely watched by the marketplace. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.
The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are near steady and just above $69.00 a barrel.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. Recent price action still suggests that at least a near-term market top is in place, if not a major top. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Friday’s high of 2,800.50 and then at last week’s high of 2,824.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,749.75 and then at 2,732.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index December futures: Prices are firmer in early U.S. trading. Recent price action still suggests a near-term market top is in place, if not a major market top. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 7,200.00 and then at 7,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,057.00 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly higher in early U.S. trading today. Bears have the solid overall near-term technical advantage as a two-month-old downtrend is in place on the daily 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 138 3/32 and then at 138 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 137 15/32 and then at 137 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are steady in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend 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 neutral early today. Shorter-term resistance lies at the overnight high of 118.02.0 and then at last week’s high of 118.09.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 117.28.0 and then at last week’s low of 117.25.0. 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 up in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 even with 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 October high of 95.840 and then at 96.000. Shorter-term support is seen at the overnight low of 95.205 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly up on a mild corrective, short-covering bounce after hitting a four-week low last Thursday. Recent strong selling pressure suggests this market has topped out. 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 $70.00 and then at $71.00. Look for sell stops just below technical support at last week’s low of $68.47 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were mixed to firmer overnight. Bulls faded late last week. Still, market bottoms look to be in place for all three major grain markets, but the upside is limited by big U.S. corn and soybean crops being harvested, and tepid world demand for U.S. wheat.
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