Wednesday, October 17–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, on corrective pullbacks from Tuesday’s strong gains that began to repair the recent serious chart damage. Daily volatility is still elevated compared to recent weeks and months.
The rift between the U.S. and Saudi Arabia regarding a missing Saudi journalist who many think was killed by the Saudi Kingdom remains near the front burner of the marketplace. The U.S. Secretary of State was in Saudi Arabia talking to the king and now is in Turkey to see its president. According to news reports, the Saudi king could be caught up in a cover-up of the reporter’s murder. President Trump said there would be “severe punishment” of the Saudi Kingdom if it is determined it was complicit in the death of the journalist. There is a lot at stake for both sides.
The U.S. economic highlight at mid-week will be the afternoon release of the minutes from the Federal Reserve’s FOMC meeting that was held in late-September. Traders and investors will parse the report for clues on futures direction and timing of U.S. monetary policy, and also focus on comments on the U.S. economy and inflation.
The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices lower and trading just around $71.50 a barrel.
U.S. economic data due for release Wednesday includes the FOMC minutes, the weekly MBA mortgage applications survey, new residential construction and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on a downside correction from Tuesday’s strong gains that began to repair the recent serious chart damage. 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 bearish early today. The 4-day moving average is below the 9-day. The 9-day is below 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 overnight high of 2,824.25 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,800.00 and then at 2,775.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index December futures: Prices are lower in early U.S. trading, on a corrective pullback from Tuesday’s strong gains. Recent price action still strongly 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 still 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,368.50 and then at 7,400.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,300.00 and then at 7,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today. Bears have the solid overall near-term technical advantage as a six-week-old downtrend is in place on the daily chart. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 138 18/32 and then at last week’s high of 138 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 138 even and then at 137 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 118.06.5 and then at this week’s high of 118.10.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 118.00.0 and then at 117.28.0. 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 firmer in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above 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 95.060 and then at 95.470. Shorter-term support is seen at this week’s low of 94.470 and then at 94.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S. trading. Recent strong selling pressure still 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $72.43 and then at this week’s high of $72.70. Look for sell stops just below technical support at last week’s low of $70.51 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were narrowly mixed overnight. Not much new this week. While market bottoms look to be in place for all three major grain markets, the upside is limited by big U.S. corn and soybean crops being harvested. Harvest will pick up speed in the Corn Belt now that fields are drying out from the recent heavy rains. My bias is still for choppy and sideways-to-higher price action into the end of this year.
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