Tuesday, October 15–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins. Risk aversion is not keen Tuesday despite traders and investors backing off on their initial upbeat assessment of the U.S.-China “Phase 1” trade agreement reached last week, and which has yet to be signed.
China’s trade war with the U.S. brought more dour news on China’s manufacturing front. The world’s second-largest economy saw its producer price index down 1.2% in September, year-on-year. Consumer price inflation rose 3% year-on-year in September, due to a surge in food prices at up 11%. The food rise was led by a more than 69% rise in pork prices due to the spreading African swine fever disease.
Germany’s economy got more downbeat data Tuesday. The closely watched ZEW survey current situation index fell to -25.3 in October versus -19.9 in September, and -23.6 as the consensus forecast. The ZEW survey expectations index was -22.8 in October compared to -22.5 in September and
-26.4 that was forecast.
Nymex crude oil prices are lower and trading around $53.00 a barrel today. The other key “outside market” sees the U.S. dollar index slightly up in early U.S. trading.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the Empire State manufacturing survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,982.50 and then at last week’s high of 2,994.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,953.75 and then at 2,941.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the firm near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at last week’s high of 7,918.50 and then at the September high of 8,002.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,807.00 and then at 7,767.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 neutral early today. Shorter-term technical resistance is seen at 162 even and then at last Friday’s high of 162 19/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 31/32 and then at Monday’s low of 160 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading. 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 neutral early today. Shorter-term support lies at the overnight low of 130.05.0 and then at Monday’s low of 129.30.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Monday’s high of 130.19.0 and then at 130.26.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.280 and then at last Friday’s high of 98.450. Shorter-term support is seen at the overnight low of 98.005 and then at last week’s low of 97.885. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $53.00 and then at the overnight high of $53.62. Look for sell stops just below technical support at the overnight low of $52.39 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices mostly weaker overnight. Corn was down around 1 1/2 cents, off around 1/2 cent and wheat about 2 cents down. There are mixed fundamentals at work in the grain markets today. US harvest is well behind the normal pace, what with the late-maturing corn and soybean crops and then a major winter storm that socked the northern US plains and Corn Belt regions. Last week’s U.S.-China “Phase 1” trade agreement is now in question, as China has not signed the deal. Many grain traders reckon the agreement is fraught with potholes that are likely derail it. The weekly USDA crop progress report Tuesday afternoon (delayed by one day due to a US government holiday Monday) is expected to show US corn harvest at 23% complete versus 15% complete last week and 38% last year. US soybean harvest is seen at 25% complete versus 5% last week and 38% last year at this time. Traders will also closely scrutinize the weekly USDA export inspections report, also delayed by one day due to the US holiday. The technical charts in corn, wheat and soybeans have turned more bullish and now suggest futures prices can trend sideways-to-higher into the end of the 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