Tuesday, October 24–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, after a rare sell off that occurred on Monday. Global equities traders are focused on corporate earnings reports this week.
Gold prices are slightly lower in pre-U.S.-session trading. The bears have some technical momentum on their side early this week.
In overnight news, the Euro zone Markit purchasing managers’ survey (PMI) came in at 55.9 in October versus 56.7 in September. A reading above 50.0 signals growth in the sector. The October decline from September was more than expected and this report falls into the camp of the European Central Bank doves, who want to see the ECB hold off on tightening its monetary policy.
The U.S. dollar is slightly lower in early U.S. trading Tuesday. The other key “outside market finds Nymex crude oil futures prices firmer and trading above $52.00 a barrel. Crude oil bulls have the slight overall near-term technical advantage.
This week the European Central Bank holds its regular monetary policy meeting on Thursday. Many expect the ECB to announce more details on the winding down of its bond-buying program.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. flash services PMI, the U.S. flash manufacturing PMI, and the Richmond Fed business activity survey.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly higher in early U.S. trading, following a profit-taking sell off on Monday, when prices early on hit another contract and record high. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Monday’s contract high of 2,577.25 and then at 2,590.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,561.50 and then at 2,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index December futures: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 6,100.00 and then at the contract high of 6,132.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 6,051.25 and then at 6,025.00. 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 lower in early U.S. trading. Bears have some near-term technical momentum. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 153 even and then at Monday’s high of 152 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at 151 16/32 and then at 151 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading. Prices today are poised to close at the lowest closing level in 3.5 months. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 125.00.5 and then at 125.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the October low of 124.22.5 and then at 124.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is even 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 October high of 94.10 and then at 94.250. Shorter-term support is seen at the overnight low of 93.555 and then at 93.250. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are firmer in early U.S. trading. Bulls have the slight overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the October high of 52.65 and then at the September high of $53.11. Look for sell stops just below technical support the overnight low of $51.55 and then at last week’s low of $50.87. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were weaker overnight. Harvest progress in the U.S. Corn Belt is in full swing, with no major delays. Hedge pressure from grain elevators will limit the upside in corn and soybeans for the next couple weeks. Still, price action in the grains hints at market bottoms in place.