Wednesday, October 4–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight, on normal downside corrections after recent gains. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. U.S. stock indexes are near their record highs.
Gold and silver prices are higher on bargain hunting and short covering, following recent selling pressure that pushed prices to seven-week lows earlier this week. A weaker U.S. dollar on this day is also favoring the gold and silver market bulls.
In overnight news, the Euro zone reported its composite purchasing managers index (PMI) came in at 56.7 in September versus 55.7 in August. A reading of 56.7 was expected. A number above 50.0 suggests growth in the sector.
Fed Chair Janet Yellen gives a speech Wednesday afternoon. Any comments she makes on the U.S. economy will be closely scrutinized for clues on the timing of future monetary policy moves by the Federal Reserve.
Traders and investors are looking ahead to Friday’s U.S. employment report for September from the Labor Department. The key non-farm payrolls number is expected to come in at up 80,000. The unusually low non-farm jobs growth estimate is due to two major hurricanes that hit the U.S. mainland in September.
The U.S. dollar index is lower in early U.S. trading, on a corrective pullback after hitting a six-week high on Tuesday.
The other key outside market on Wednesday morning sees Nymex crude oil futures weaker. While the oil bulls still have the slight overall near-term technical advantage, there are stiff chart resistance layers above the market.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the ISM non-manufacturing index, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly lower in early U.S. trading, after hitting a contract and record high on Tuesday. The shorter-term moving averages (4-, 9- and 18-day) are still 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 to bearish early today. Today, shorter-term technical resistance comes in at the contract high of 2,533.50 and then at 2,550.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,517.00 and then at 2,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are slightly down in early U.S. trading today. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 6,009.00 and then at the contract high of 6,025.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 5,958.50 and then at 5,933.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher on short covering after hitting a two-month low on Tuesday. Prices are still in a three-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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 153 4/32 and then at 153 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 152 23/32 and then at this week’s low of 152 even. 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, on short covering after prices Monday hit a 2.5-month low. Bears still have the overall near-term technical advantage. Prices are in a three-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 bullish early today. Shorter-term resistance lies at 125.20.0 and then at 125.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.11.0 and then at 125.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is lower in early U.S. trading, on a downside correction, after hitting a seven-week high Tuesday. Greenback bulls still have some momentum. 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 93.420 and then at this week’s high of 93.775. Shorter-term support is seen at this week’s low of 92.940 and then at 92.800. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are weaker in early U.S. trading. Bulls still have the slight overall near-term technical advantage. However, there are stiff chart resistance layers that lie just overhead. Look for buy stops to reside just above technical resistance at $51.00 and then at this week’s high of $51.71. Look for sell stops just below technical support at the overnight low of $49.91 and then at $49.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were narrowly mixed overnight. The sideways and choppy price action in the grain markets the past couple weeks could be basing, which makes me suspect that harvest lows are in place and that prices will at least work sideways into the end of the year. I don’t look for any significant rallies right during the U.S. corn and soybean harvesting.