Tuesday, October 9–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight. U.S. stock indexes are poised for weaker openings when the New York day session begins. There is still some risk aversion in the world marketplace Tuesday. And there are now early chart clues the U.S. stock indexes have put in at least near-term market tops, if not major tops.
World equity markets are still rattled by rising government bond yields that are pulling investor interest away from stocks. The benchmark U.S. 10-year Treasury note on Tuesday hit a yield of 3.25%, which is a 7.5-year high.
The world’s two largest economies are continuing to escalate their trade war that has also now turned into a war of words. The U.S. secretary of state and Chinese foreign minister exchanged harsh words on Monday.
The International Monetary Fund on Monday lowered its world economic growth forecasts due to the U.S.-China trade war and the presently shaky secondary world currency markets. This week, the Chinese yuan is in focus as it continues to depreciate against the U.S. dollar even as Chinese monetary officials work to stem the yuan’s slide.
The key outside markets today find the U.S. dollar index again higher, on safe-haven demand. Meantime, November Nymex crude oil prices are higher and trading just below $75.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are lower in early U.S. trading. Recent price action hints that at least a near-term market top is in place. 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 bearish early today. Today, shorter-term technical resistance comes in at Monday’s high of 2,898.25 and then at 2,915.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,866.00 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
December Nasdaq index December futures: Prices are lower in early U.S. trading. Recent price action begins to hint a near-term market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 7,400.00 and then at Monday’s high of 7,453.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,286.50 and then at 7,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today and hit another contract low. Bears have the solid overall near-term technical advantage as an accelerating six-week-old downtrend is in place on the daily 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 bearish early today. Shorter-term technical resistance is seen at Monday’s high of 137 14/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight contract low of 136 16/32 and then at 136 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are weaker in early U.S. trading. Prices Monday hit a contract low. Bears have the solid overall near-term technical advantage. Prices are in an accelerating six-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 bearish early today. Shorter-term resistance lies at the overnight high of 117.23.0 and then at 118.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the contract low of 117.13.5 and then at 117.08.0. 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 higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 95.780 and then at 96.000. Shorter-term support is seen at the overnight low of 95.345 and then at 95.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are higher in early U.S. trading. The bulls have the firm overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above 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 $76.00 and then at the contract high of $76.90. Look for sell stops just below technical support at the overnight low of $74.18 and then at Monday’s low of $73.07. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were weaker overnight. Heavy rains in much of the U.S. Corn Belt recently and more in the coming days will delay corn and soybean harvest, and that will limit the downside in corn and beans. While market bottoms look to be in place for all three major grain markets, the upside is limited by the U.S.-China trade war and the surging U.S. dollar index.
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