Friday, October 19–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight. China’s stock market rallied after the Chinese government pledged to keep its economy on track and expressed confidence in future growth. This comes after the Chinese stock market dropped to a multi-year low Thursday and the Chinese yuan dropped to a 21-month low against the U.S. dollar. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on modest corrective bounces after solid losses suffered on Thursday.
In overnight news, China’s gross domestic product grew by 6.5% in the third quarter, year-on-year. That was down from the 6.7% growth rate in the second quarter. A rate of 6.6% was expected for the third quarter. The third-quarter figure was the slowest economic growth pace for China in several years.
The Euro currency has been rattled again this week by recurring trader concerns regarding Italy falling into line with European Union rules on country’s budgets.
And don’t be surprised if trader and investor anxiety upticks as the trading session progresses Friday, heading into a very uncertain weekend. This is mainly due to pending results of an investigation into the disappearance of a Saudi journalist that could be a murder and could involve the Saudi Arabian government. The markets were jolted on Thursday when U.S. Secretary Mnuchin backed out of a high-level business conference being held in Saudi Arabia.
The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are modestly up and are trading below $69.00 a barrel. Still, oil prices hit a four-week low on Thursday amid concerns about worldwide economic growth that could crimp demand for crude.
U.S. economic data due for release Friday is light and includes existing home sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in early U.S. trading, on an upside correction from Thursday’s strong losses. Recent price action 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 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 neutral early today. Today, shorter-term technical resistance comes in at 2,800.00 and then at this week’s high of 2,824.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,771.00 and then at Thursday’s low of 2,756.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index December futures: Prices are firmer in early U.S. trading, on a corrective bounce from Thursday’s strong losses. Recent price action 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 7,200.00 and then at 7,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,135.50 and then at Thursday’s low of 7,094.00. 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 slightly 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Thursday’s high of 138 13/32 and then at this week’s high of 138 26/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 137 15/32 and then at 137 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are steady 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 bullish early today. Shorter-term resistance lies at this week’s high of 118.09.5 and then at 118.14.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 118.00.0 and then at this week’s low of 117.25.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady 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. 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 the October high of 95.840 and then at 96.000. Shorter-term support is seen at Thursday’s low of 95.210 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer on a corrective, short-covering bounce after hitting a four-week low on Thursday. 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 neutral early today. Look for buy stops to reside just above technical resistance at the $70.00 and then at $71.00. Look for sell stops just below technical support at this week’s low of $68.47 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were mixed overnight. Bulls are fading late this week and need to show fresh power soon. 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