Friday, October 25–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Trader and investor risk appetite remains mostly upbeat as U.S. stock indexes are hovering not far below their all-time highs scored earlier this year.
The Russian central bank on Friday cut its main interest rate by 0.5%, to 6.5%. The move pressured the Russian currency, the ruble.
In other overnight news, the European Central Bank lower its expectations for Euro zone economic growth in the coming years, at 1.1% in 2019, at 1.0% in 2020, and at 1.3% in 2021. The ECB forecast inflation for the same three years at 1.2%,1.2% and 1.4%, respectively.
Reports say the U.S. and China continue to hash out “Phase 1” of their trade agreement reached a couple weeks ago. The U.S. is pushing China to purchase more U.S. ag products in exchange for the U.S. eliminating some of its tariffs on Chinese imports. While it appears the trade talks have made progress, veteran market watchers know “the devil is in the details.”
The key “outside markets” today find Nymex crude oil prices slightly weaker in early U.S. trading today and trading around $56.00 a barrel. Meantime, the U.S. dollar index is near steady.
U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are not far below this year’s highs, but those highs are also stiff technical resistance. 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 early today. Today, shorter-term technical resistance comes in at this week’s high of 3,015.25 and then at the contract high of 3,032.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,982.00 and then at 2,966.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly firmer in early U.S. trading. Bulls have the firm near-term technical advantage but stiff chart resistance lies just overhead. 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 the September high of 8,002.50 and then at the contract high of 8,071.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at 7,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are modestly down in early U.S. trading. Bulls still have the overall near-term technical advantage and have stabilized the market with sideways price action. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 this week’s high of 160 22/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at 159 16/32 and then at this week’s low of 159 2/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are slightly lower in early U.S. trading. Bulls have stabilized prices recently. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at Thursday’s low of 129.20.5 and then at this week’s low of 129.15.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at this week’s high of 130.04.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. Bulls have stabilized the market late this week. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.555 and then at 97.845. Shorter-term support is seen at Thursday’s low of 97.055 and then at this week’s low of 96.885. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady in early U.S. trading. Bulls have had a good week as prices hit a four-week high Thursday. 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 $56.51 and then at $57.00. Look for sell stops just below technical support at Thursday’s low of $55.41 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were steady to narrowly mixed overnight. Bullish for the grains is weather forecasts next week that include cold, rain and even some snow for the US Corn Belt. That will delay an already late harvest for corn and soybean crops, and could cause quality problems. However, the upside has been limited in the grains this week by normal autumn harvest hedge pressure from commercials, as farmers sell their newly cut crop right off their combines. Overall, grain trader attitudes remain upbeat this week, including the US-China trade negotiations. Reports overnight said the U.S. and China continue to hash out “Phase 1” of their trade agreement reached a couple weeks ago. The U.S. is pushing China to purchase more U.S. ag products in exchange for the U.S. eliminating some of its tariffs on Chinese imports. While it appears the trade talks have made progress, veteran market watchers know “the devil is in the details.” The International Grains Council has lowered its global wheat production forecast for 2019-20 by 2 million metric tons due to Australia’s wheat crop estimate being lowered to 17.0 million MT from 19.1 million due to drought. The IGC now projects global wheat output at 762 million metric tons in 2019-20.
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