World Stock Markets Up Wed. A.M. On A Bit Less Risk Aversion

Wednesday, October 3–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Chinese markets are closed until Friday for a public holiday.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. Reports overnight said Italy is backing down from its hardline stance with the European Union over the matter. The Euro currency today stabilized on the news, after being under selling pressure earlier this week.

In other overnight news, U.S. Federal Reserve Bank of Chicago President Charles Evans said in a speech in London the U.S. economy is humming right along and that the Fed will likely have to put the brakes on the economic growth by continuing to gradually raise interest rates. He added such Fed policy moves are historically normal during stronger economic expansion periods.

U.S. retail giant Amazon has significantly raised its minimum wage for its workers to $15 an hour. While this move seems benign right now, it’s just one more small clue of rising price inflation that could very well become problematic at some point—and just maybe sooner than even economists expect. Fed Chairman Jerome Powell reiterated on Tuesday that price inflation is not a problem. Problematic inflation is generally bullish for hard assets like raw commodities and bearish for paper assets like stocks and bonds.

The key outside markets today find the U.S. dollar index near steady after hitting a 2.5-month high on Tuesday. Meantime, November Nymex crude oil prices are also near steady after hitting a four-year high Tuesday. Prices are trading just above $75.00 a barrel.

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 global services PMI, the ISM non-manufacturing report on business and the weekly DOE liquid energy stocks report.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are firmer in early U.S. trading and not far below this week’s contract and record highs. The bulls have the solid overall near-term technical advantage. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 2,947.00 and then at 2,960.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,917.50 and then at last week’s low of 2,907.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0

December Nasdaq index December futures: Prices are higher and not far below this week’s contract and record high. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract high of 7,728.75 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,630.25 and then at 7,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are lower in early U.S. trading today. Bears have the overall near-term technical advantage as a five-week-old downtrend is in place on the daily chart. However, trading has turned choppy. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 140 16/32 and then at this week’s high of 140 23/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 139 23/32 and then at the September low of 139 17/32. 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. Bears have the overall near-term technical advantage. Prices are in a five-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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 118.29.5 and then at last week’s high of 119.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 118.16.5 and then at the September low of 118.11.0. 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 slightly down on profit taking after hitting a six-week high on Tuesday. Bulls have good upside momentum and fresh technical power. 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 neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 95.390 and then at 95.750. Shorter-term support is seen at the overnight low of 94.885 and then at this week’s low of 94.605. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

November Nymex crude oil prices are near steady and near this week’s contract high and four-year high. The bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the contract high of $75.91 and then at $77.00. Look for sell stops just below technical support at $75.00 and then at $74.00. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Grain futures prices were firmer overnight. Heavy rains expected over the U.S. Corn Belt in the coming days will delay corn and soybean harvest, and that’s friendly for those market prices. Grain market bulls got some more bullish news with the new U.S.-Mexico-Canada trade agreement reached earlier this week. Market bottoms look to be in place for all three major grain markets.

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