Wednesday, October 25–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly weaker in overnight trading, pressured a bit by some downbeat corporate earnings reports. Japan’s Nikkei stock index saw its record-setting 16-session winning streak halted Wednesday.
U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.
Gold and silver prices are lower and hit a three-week low overnight. The bears have downside technical momentum in these two precious metals markets.
In overnight news, the U.K. GDP was reported up 0.4% in the third quarter and up 1.5%, year-on-year, which was a bit better than market expectations.
The German Ifo business climate index rose to 116.7 in October, which was better than forecasts.
The U.S. dollar is slightly higher in early U.S. trading Wednesday. The other key “outside market finds Nymex crude oil futures prices slightly lower and trading above $52.00 a barrel.
The key markets event of the week occurs on Thursday, when the European Central Bank holds its regular monetary policy meeting. Many expect the ECB to announce more details on the winding down of its bond-buying program.
U.S. economic data due for release Wednesday includes weekly MBA mortgage applications survey, durable goods orders, the U.S. monthly house price index, new residential sales, 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. Bulls still have the firm overall near-term technical advantage and there are no strong, early technical clues that a market top is close at hand. The shorter-term moving averages (4-, 9- and 18-day) are 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 2,577.25 and then at 2,590.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,560.50 and then at 2,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index December futures: Prices are weaker in early U.S. trading, on profit taking. Bulls still have the firm technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at Tuesday’s high of 6,092.50 and then at 6,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 6,051.25 and then at 6,025.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower and hit a 3.5-month low in early U.S. trading. Bears have the near-term technical advantage and have technical momentum. 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 bearish early today. Shorter-term technical resistance is seen at 151 even and then at the overnight high of 151 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 150 27/32 and then at 150 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
December U.S. T-Notes: Prices are lower and hit a 5.5-month low in early U.S. trading. Bears have the technical advantage. 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 bearish early today. Shorter-term resistance lies at the overnight high of 124.22.0 and then at 124.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.11.5 and then at 124.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the October high of 94.10 and then at 94.250. Shorter-term support is seen at this week’s low of 93.555 and then at 93.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading. Bulls have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the October high of 52.65 and then at the September high of $53.11. Look for sell stops just below technical support at this week’s low of $51.55 and then at last week’s low of $50.87. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were firmer overnight. Harvest progress in the U.S. Corn Belt is in full swing, with no major delays. Hedge pressure from grain elevators will limit the upside in corn and soybeans for the next couple weeks. Still, recent price action in the grains hints at market bottoms in place.