Friday, October 26–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly lower overnight. U.S. stock
indexes are pointed toward sharply lower openings and at
five-month lows when the New York day session begins. It’s
likely going to be another volatile day during the U.S.
trading session today. Disappointing earnings reports from
Amazon and Alphabet stocks are helping to press the U.S.
equities lower.
There are near-term technical clues the U.S. stock indexes
have put in near-term market tops, if not major tops. If
that’s indeed the case, it’s a bullish element for hard
assets like the precious metals and other raw commodities.
Today will be an extra important trading day for U.S. stock
indexes. Solid losses to end the week will further
exacerbate trader and investor anxiety heading into an
uncertain weekend. A big rally in U.S. stocks today would
assuage the marketplace anxiety to some degree.
Traders and investor can point to no single factor that is
spooking the world marketplace in late October. There are
ongoing geopolitical concerns 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. It’s not going to be
surprising to see some fresh news on one of these fronts in
the next few days.
The Chinese yuan fell to a multi-year low versus the U.S.
dollar overnight. The U.S. is worried China is devaluing its
currency to gain trade advantages.
In other overnight news, the European Union got more dour
economic news today when the European Central Bank’s survey
of professional forecasters reported weaker economic
projections for the Euro zone in the coming years. The
survey projected a 2.0% GDP gain this year and 1.8% growth
in 2019.
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
marketplace could react to the GDP data if it’s a miss from
forecasts. But it appears the cards are stacked against the
stock market bulls because a GDP miss to the downside would
mean slowing business activity, while a miss to the upside
would mean the Federal Reserve likely continuing to tighten
monetary policy.
The key outside markets today find the U.S. dollar index
near steady and hovering near this week’s nine-week high.
Look for the greenback to remain supported on safe-haven
demand amid wobbly world stock markets. Meantime, November
Nymex crude oil prices are lower and trading around $66.50
a barrel. Oil prices fell to a two-month low earlier this
week, on worries about slowing world economic growth, due
in part to the U.S.-China trade war.
Other U.S. economic data due for release Friday includes
the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are solidly lower
and hit a five-month low in early U.S. trading. 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 bearish early today. Today, shorter-term
technical resistance comes in at the overnight high of
2,680.75 and then at 2,700.00. Buy stops likely reside just
above those levels. Downside support for active traders
today is located at the overnight low of 2,646.00 and then
at 2,625.00. Sell stops are likely located just below those
levels. Wyckoff’s Intra-day Market Rating: 3.5
December Nasdaq index December futures: Prices are solidly
lower and hit a five-month low in early U.S. trading. 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
bearish early today. Shorter-term technical resistance is
seen at the overnight high of 6,900.00 and then at 7,000.00.
Buy stops likely reside just above those levels. On the
downside, short-term support is seen at the overnight low of
6,734.25 and then at 6,700.00. Sell stops are likely located
just below those levels. Wyckoff’s Intra-Day Market Rating:
3.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher and hit a three-
week high on safe-haven demand and short covering. A
fledgling price uptrend is in place on the daily bar chart.
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 bullish early today.
Shorter-term technical resistance is seen at 139 24/32 and
then at 140 even. Buy stops likely reside just above those
levels. Shorter-term support lies at 139 even and then at
the overnight low of 138 28/32. Sell stops likely reside
just below those levels. Wyckoff’s Intra-Day Market Rating:
6.0
December U.S. T-Notes: Prices are higher and hit a six-week
high in early U.S. trading. Safe-haven demand and short
covering are featured. A fledgling uptrend is in place on
the daily bar chart. 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
bullish early today. Shorter-term resistance lies at the
overnight high of 119.01.0 and then at 119.08.0. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at the overnight low of 118.21.5 and
then at 118.16.0. Sell stops likely reside just below those
levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer and hit a contract
high in early U.S. trading. Bulls have the solid overall
near-term technical advantage amid safe-haven demand for the
greenback. 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 96.750 and then at 97.000. Shorter-term
support is seen at the overnight low of 96.325 and then at
96.000. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
December Nymex crude oil prices are lower in early U.S.
trading and near this week’s two-month low. 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 to bearish early today. Look for
buy stops to reside just above technical resistance at the
overnight high of $67.04 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: 4.0
GRAINS
Grain futures prices were higher overnight. The grain market
bears still have the overall near-term technical advantage,
even though it 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.
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
