Thursday, October 18–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight, with European stock indexes mostly firmer and Asian indexes mostly lower. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Traders and investors are awaiting the results of a Turkish investigation into the disappearance of a Saudi journalist. The Turks say the journalist was killed and the Saudis deny knowing anything about it. This matter is likely to come to a head in the next few days, with President Trump saying results of the investigation are likely yet this week. If the Saudis are complicit, ramifications for the world markets will be significant. Some press reports say the Saudis killed the journalist.
U.S. Treasury bond yields are on the rise again following FOMC minutes released Wednesday afternoon that were deemed a bit hawkish on U.S. monetary policy.
The key outside markets today find the U.S. dollar index slightly lower on a corrective pullback from Wednesday’s solid gains. Meantime, November Nymex crude oil prices are lower, hit a four-week low and are trading around $69.00 a barrel. Brent crude oil has now fallen below the $80.00-per-barrel level. Rising U.S. oil stockpiles this week are bearish for the oil market.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
–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. 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 still 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 early today. Today, shorter-term technical resistance comes in at this week’s 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 Wednesday’s low of 2,783.25. 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 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 the overnight high of 7,309.50 and then at 7,350.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,250.00 and then at Wednesday’s low of 7,221.50. 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 lower in early U.S. trading today. Bears have the solid overall near-term technical advantage as a seven-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 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 138 even and then at 138 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 137 15/32 and then at 137 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. Bears have the solid overall near-term technical advantage. Prices are in a seven-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 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 resistance lies at 118.00.0 and then at 118.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 117.25.0 and then at 117.20.0. 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. Bulls have the firm 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 the overnight high of 95.510 and then at the October high of 95.840. Shorter-term support is seen at 95.000 and then at this week’s low of 94.470. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are lower and hit a four-week low in early U.S. trading. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $70.03 and then at $71.00. Look for sell stops just below technical support at $68.50 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were mixed to lower overnight. Traders will closely examine this morning’s weekly USDA export sales report. 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 has picked up speed in the Corn Belt late this week as fields are drying out from the recent heavy rains.
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