Tuesday, October 10–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed in overnight trading. Asian stock indexes were mostly firmer and European stock indexes were mostly weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. stock indexes are at or near record highs.
Gold prices are higher and once again closing in on the psychologically important $1,300.00 level. Safe-haven demand and short covering are featured in gold and silver markets early this week.
In overnight news, geopolitical worries were ratcheted up a notch on reports U.S. President Donald Trump will stop at the North Korea-South Korea demilitarized zone to deliver a strong anti-North Korea speech, during his Asia trip next week. Also, U.S. Defense Secretary James Mattis reportedly told his Army officers to be ready, in case U.S.-North Korea negotiations fail.
The European Union is worried and its stock markets are shaky regarding Catalonia possibly seceding from Spain. The Catalan regional president is scheduled to give a speech Tuesday, in which he may announce his intention to separate Catalonia from Spain.
The U.S. dollar index is lower again in early U.S. trading, on a corrective pullback from recent gains. The other key outside market on Tuesday morning sees Nymex crude oil futures prices higher and just above the key $50.00 level. Reports said Saudi Arabia plans to cut its crude oil exports in November.
Traders and investors are looking ahead to what is arguably the most important U.S. data point of the week: Wednesday afternoon’s minutes from the latest FOMC meeting. Most of the marketplace now expects the Federal Reserve to raise interest rates by 0.25% at the December FOMC meeting.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the NFIB small business index, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are firmer in early U.S. trading, and very close to last week’s contract and record highs. The market is still well overbought and due for a downside correction very soon. The shorter-term moving averages (4-, 9- and 18-day) are 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 2,565.00 and then at 2,575.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,539.25 and then at 2,525.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index December futures: Prices are firmer and close to Monday’s contract and record high. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 6,084.00 and then at 6,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 6,054.75 and then at 6,037.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer on tepid short covering after hitting a nine-week low last Friday. Prices are in a four-week-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 to bearish early today. Shorter-term technical resistance is seen at 152 16/32 and then at 153 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 151 28/32 and then at last week’s low of 151 7/32 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading, on short covering after hitting a 2.5-month low last Friday. Bears still have the overall near-term technical advantage. Prices are in a four-week-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 and 18-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 125 7/32 and then at 125.14.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.00.0 and then at last week’s low of 124.22.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is lower in early U.S. trading, on more of a corrective pullback after hitting a 2.5-month high last Friday. The shorter-term moving averages for the dollar index are still 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 for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 93.670 and then at last week’s high of 94.100. Shorter-term support is seen at 93.000 and then at 92.750. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Look for buy stops to reside just above technical resistance at $50.82 and then at $51.00. Look for sell stops just below technical support at the overnight low of $49.54 and then at last week’s low of $49.10. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were mixed overnight. Soybean bulls and bears are on a level overall near-term technical playing field. Wheat and corn bears have the firm chart advantage at present. However, I do not think there is much, if any, downside left in the grains following the selling pressure in recent months.