Friday, October 12–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight on
corrective bounces from this week’s strong selling
pressure. U.S. stock indexes are pointed toward solidly
higher openings when the New York day session begins.
However, keep your seatbelts buckled today because
volatility is likely to remain high on this last trading
day of the week, heading into an uncertain weekend not
knowing what to expect come Monday morning.
Price action this week from a technical perspective
strongly suggests the U.S. stock indexes have put in near-
term tops, if not major tops. If so, such is a bullish
development for the competing hard assets like the metals.
Gold prices have backed off a bit today after the strongest
one-day gains in over two years were seen on Thursday. Now,
the yellow metal is in a much better technical posture to
suggest higher prices are likely in the coming weeks, or
longer.
News U.S. President Trump and Chinese leader Xi Jinping
will sit down and talk in November at the G20 meeting in
Argentina could be helping to assuage market concerns
today. For months the two largest economies have been on a
downhill slide in relations. The Chinese yuan rebounded
against the U.S. dollar today, in part on that news.
Another worrisome factor in the marketplace this week is
notions the strong U.S. economic expansion could be coming
to an end, due in part to a Federal Reserve monetary policy
that got too aggressive in raising interest rates.
President Trump again admonished the Fed this week for
raising rates too fast. He called the Fed “crazy” and
“loco.”
The key outside markets today find the U.S. dollar index
modestly up. Meantime, November Nymex crude oil prices are
firmer on a corrective bounce from strong selling pressure
the past two days that begins to suggest that market has
topped out. Take a look at a daily chart for unleaded
gasoline futures and it certainly suggests lower gasoline
prices at the retail pumps the rest of this year, and maybe
beyond.
U.S. economic data due for release Friday includes the
import and export prices report, and the University of
Michigan consumer sentiment 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 after hitting a three-
month low on Thursday. This week’s price action strongly
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 to bullish early today. Today,
shorter-term technical resistance comes in at the overnight
high of 2,785.00 and then at 2,800.00. Buy stops likely
reside just above those levels. Downside support for active
traders today is located at the overnight low of 2,746.25
and then at this week’s low of 2,712.25. Sell stops are
likely located just below those levels. Wyckoff’s Intra-day
Market Rating: 6.0
December Nasdaq index December futures: Prices are solidly
higher in early U.S. trading after hitting a 4.5-month low
on Thursday. Recent price action strongly 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 and
18-day. The 9-day average is below the 18-day. Short-term
oscillators (RSI, slow stochastics) are neutral to bullish
early today. Shorter-term technical resistance is seen at
the overnight high of 7,169.00 and then at 7,200.00. Buy
stops likely reside just above those levels. On the
downside, short-term support is seen at the overnight low of
7,034.25 and then at 7,000.00. Sell stops are likely located
just below those levels. Wyckoff’s Intra-Day Market Rating:
6.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are lower in early U.S.
trading today. Bears have the solid overall near-term
technical advantage as a six-week-old downtrend is in place
on the daily chart. Shorter-term moving averages (4- 9- 18-
day) are neutral early today. The 4-day moving average is
even with the 9-day. The 9-day is below the 18-day moving
average. Oscillators (RSI, slow stochastics) are neutral
early today. Shorter-term technical resistance is seen at
the overnight high of 138 15/32 and then at this week’s high
of 138 31/32. Buy stops likely reside just above those
levels. Shorter-term support lies at the overnight low of
137 30/32 and then at 137 23/32. 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 solid overall near-term technical
advantage. Prices are in a six-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
even with 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 the overnight
high of 118.08.5 and then at this week’s high of 118.14.5.
Buy stops likely reside just above those levels. Shorter-
term technical support lies at the overnight low of
118.00.0 and then at 117.28.0. 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 up in early U.S.
trading. Bulls still have the overall near-term technical
advantage. The shorter-term moving averages for the dollar
index are neutral early today, as the 4-day is below 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 95.000 and then at Thursday’s high of 95.125.
Shorter-term support is seen at the overnight low of 94.640
and then at 94.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer in early U.S.
trading, on a corrective bounce from recent strong selling
pressure that suggests this market has topped out. The bulls
still have the overall near-term technical advantage. The
shorter-term moving averages are neutral early today as the
4-day is below 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 overnight high
of $72.01 and then at Thursday’s high of $72.76. Look for
sell stops just below technical support at this week’s low
of $70.51 and then at $70.00. Wyckoff’s Intra-Day Market
Rating: 5.5
GRAINS
Grain futures prices were mostly firmer overnight. Traders
are awaiting today’s weekly USDA export sales report. While
market bottoms look to be in place for all three major grain
markets, the upside is limited by big U.S. corn and soybean
crops being harvested and the U.S.-China trade war. Still,
my bias is for choppy and sideways-to-higher price action
into the end of this year.
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