Friday, November 2–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor attitudes are upbeat amid recent proclamations by U.S. President Trump and Chinese President Xi Jinping that suggest the world’s two largest economies are coming closer together to at least formal negotiations on trade. Trump late Thursday tweeted he had a “long and very good” conversation with Xi. Other reports said Trump has asked his advisors to draw up a trade agreement with China. This is the most positive rhetoric coming from both sides in months.
The Chinese yuan also gained against the U.S. dollar on the China-U.S. trade developments.
Focus in the U.S. is turning to next week’s mid-term elections, which many believe will be a referendum on the performance of President Trump. Gains by the Democrats would likely be bearish for the U.S. stock market.
The key outside markets today see the U.S. dollar index lower again following solid losses Thursday. The USDX is seeing a normal corrective pullback after hitting a 16-month high on Wednesday. Meantime, December Nymex crude oil prices are slightly weaker after hitting a 4.5-month low on Thursday, and are presently trading around $63.50 a barrel.
The key U.S. economic data point of the week, if not the month, will be Friday morning’s November employment report from the Labor Department. The key non-farm payrolls number is forecast to come in at up 188,000. However, Wednesday’s ADP national employment report reading of up 227,000 suggests Friday’s jobs report could be stronger than forecast.
Other U.S. economic data due for release Friday includes the international trade report, manufacturers’ shipments and inventories and the global manufacturing purchasing managers index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher again in early U.S. trading. A four-week-old downtrend on the daily bar chart has now been negated. The 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 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 2,764.25 and then at 2,780.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,722.75 and then at Thursday’s low of 2,705.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index December futures: Prices are firmer in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,143.25 and then at 7,175.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,971.75 and then at Thursday’s low of 6,936.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading today. Bears 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 138 24/32 and then at 139 12/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 137 24/32 and then at 137 15/32. 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. A fledgling uptrend is still in place on the daily bar chart, but now just barely. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 118.22.5 and then at 118.31.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.09.5 and then at 118.00.0. 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 lower on more of a corrective pullback after hitting a contract and 16-month high on Wednesday. Bulls still 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. 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 the overnight high of 96.205 and then at 96.450. Shorter-term support is seen at 95.500 and then at 95.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly lower and trading near Thursday’s 4.5-month low in early U.S. trading. Bears are in firm near-term technical control. 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 $64.00 and then at $65.00. Look for sell stops just below technical support at this week’s low of $63.11 and then at $62.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were higher overnight, with soybeans posting solid gains on hopes for a U.S.-China trade deal. The grain market bears still have the overall near-term technical advantage. The upside will continue to be limited in the next couple weeks by commercial hedge pressure as U.S. corn and soybean harvesting will be winding down.
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