Thursday, October 25–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed to lower overnight,
following the strong losses in U.S. stock indexes Wednesday
that put those indexes into negative territory for this
year. Asian stock markets were mostly lower overnight.
China’s and South Korea’s stock markets are now in bear
market territory, having dropped over 20% from their bull
market highs. U.S. stock indexes are pointed toward higher
openings when the New York day session begins. Look for
another volatile day in the U.S. markets.
There are near-term technical clues the U.S. stock indexes
have put in near-term market tops, if not major tops.
Traders and investor can point to no one element that is
spooking the world market place at present. There are
geopolitical issues that include the U.S.-China trade war,
U.S.-Saudi Arabia tensions over the murdered Saudi
journalist, and Italy’s defiance over forming its budget to
meet European Union rules. And there is creeping inflation
in the world economies at present. Most don’t deem the
inflation rates problematic, yet. However, there is a new
generation of worldwide investors that have ostensibly never
experienced inflation. So a 3% inflation rate could be
spooking them.
Traders and investors in Europe are awaiting Thursday’s
European Central Bank regular monetary policy meeting. No
change in EU monetary policy is expected, but ECB chief
Mario Draghi’s press conference could provide clues on
future moves by the central bank. Also, Draghi could comment
on the rift between Italy’s new government and the EU.
The U.S. economic highlight this week will be the first
estimate of third-quarter GDP due out Friday morning. GDP is
seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index
weaker on a normal corrective pullback after hitting a
nine-week high on Wednesday. Meantime, November Nymex crude
oil prices are slightly weaker and trading just below
$67.00 a barrel. Oil prices fell to a two-month low on
Tuesday.
U.S. economic data due for release Thursday includes the
weekly jobless claims report, durable goods orders, advance
economic indicators, and the Kansas City Fed manufacturing
survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early
U.S. trading, on a corrective bounce from recent strong
selling pressure. Prices Wednesday hit a five-month low.
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 bearish early today.
The 4-day moving average is below 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 2,700.00 and
then at 2,712.25. Buy stops likely reside just above those
levels. Downside support for active traders today is located
at this week’s low of 2,652.25 and then at 2,625.00. Sell
stops are likely located just below those levels. Wyckoff’s
Intra-day Market Rating: 5.5
December Nasdaq index December futures: Prices are higher in
early U.S. trading, on a corrective bounce after hitting a
five-month low on Wednesday. Recent price action 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 bearish
early today. The 4-day moving average is below 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 the overnight
high of 6,966.50 and then at 7,000.00. Buy stops likely
reside just above those levels. On the downside, short-term
support is seen at 6,875.00 and then at the overnight low of
6,816.75. 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 lower in early U.S.
trading today. Bears still have the overall near-term
technical advantage but a two-month-old downtrend on the
daily chart has been negated this week. Shorter-term moving
averages (4- 9- 18-day) are neutral early today. The 4-day
moving average is above the 9-day and 18-day. The 9-day is
even with the 18-day moving average. Oscillators (RSI, slow
stochastics) are neutral early today. Shorter-term technical
resistance is seen at this week’s high of 139 7/32 and then
at 139 16/32. Buy stops likely reside just above those
levels. Shorter-term support lies at 138 16/32 and then at
138 even. Sell stops likely reside just below those levels.
Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S.
trading. Bears have the overall near-term technical
advantage but a two-month-old downtrend on the daily bar
chart has been negated this week. Shorter-term moving
averages (4- 9- 18-day) are bullish early today. The 4-day
moving average is above the 9-day and 18-day. The 9-day is
above the 18-day moving average. Oscillators (RSI, slow
stochastics) are neutral early today. Shorter-term
resistance lies at this week’s high of 118.27.5 and then at
119.00.0. Buy stops likely reside just above those levels.
Shorter-term technical support lies at 118.16.0 and then at
118.10.0. Sell stops likely reside just below those levels.
Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early
U.S. trading, on a corrective pullback after hitting a nine-
week high on Wednesday. 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
neutral early today. The dollar index finds shorter-term
technical resistance at this week’s high of 96.305 and then
at the August high of 96.450. Shorter-term support is seen
at 96.000 and then at Wednesday’s low of 95.665. Wyckoff’s
Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly lower in early
U.S. trading. Prices hit a two-month low Tuesday. 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 $67.00
and then at $67.50. Look for sell stops just below technical
support at this week’s low of $65.74 and then at $65.00.
Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were weaker overnight. The grain market
bears continue to hold the overall near-term technical
advantage, even though it still appears harvest lows are in
place. The upside will continue to be limited by big U.S.
corn and soybean crops being harvested, and tepid world
demand for U.S. wheat. Traders will closely examine this
morning’s weekly USDA export sales report.
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
