Wednesday, October 31–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed to mostly higher overnight.
U.S. stock indexes are pointed toward higher openings when
the New York day session begins. There is still strong near-
term technical evidence the U.S. stock indexes have put in
market tops. Volatility in the U.S. stock market could still
appear at any time, as seen with Monday afternoon’s price
swoon.
Today is the last trading day of the month, which makes it a
more important trading day, from a technical chart
perspective.
China’s official purchasing managers’ index also fell to
50.2 in October from 50.8 in September. The October number
is the lowest in two years. A reading below 50.0 suggests
contraction in the sector.
The Chinese yuan has dropped to a 10-year low against the
U.S. dollar this week. There is a debate on whether the
Chinese government wants the yuan to depreciate to gain
world trade advantages. Or, the government may want to stem
the yuan’s slide due to fears of capital flight out of
China.
In another sign of the stark divergence between the U.S.
and European Union economies, the Euro zone reported its
unemployment rate for October today, at 8.1%. The U.S. rate
is 3.7%. Meantime, the Euro zone inflation rate rose to a
nearly six-year high of 2.2%, basis its latest consumer
price index report for October issued today.
The key outside markets today find November Nymex crude oil
prices firmer on a corrective bounce and trading around
$66.50 a barrel after hitting a nine-week low on Tuesday.
Meantime, the U.S. dollar index is slightly higher and hit
a new multi-month high overnight.
The key U.S. economic data point of the week, if not the
month, will be Friday’s November employment report from the
Labor Department.
U.S. economic data due for release Wednesday includes the
weekly MBA mortgage applications survey, the ADP national
employment report, the employment cost index, the ISM
Chicago business survey, the weekly DOE liquid energy
stocks report, and the U.S. Treasury quarterly refunding
announcement.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early
U.S. trading. Recent price action still suggests a market
top is in place. Prices Monday hit a six-month low. Prices
are still in a steep three-week-old downtrend on the daily
bar chart. 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
bullish early today. Today, shorter-term technical
resistance comes in at this week’s high of 2,707.00 and then
at 2,725.00. Buy stops likely reside just above those
levels. Downside support for active traders today is located
at the overnight low of 2,682.00 and then at 2,650.00. 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
six-month low on Monday. Recent price action still suggests
a market top is in place. 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
bullish early today. Shorter-term technical resistance is
seen at 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 6,816.75 and then at
6,800.00. 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. A fledgling price uptrend is still in place
on the daily bar chart, but just barely now. 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 bearish early today. Shorter-term
technical resistance is seen at the overnight high of 138
24/32 and then at 139 even. Buy stops likely reside just
above those levels. Shorter-term support lies at the
overnight low of 138 6/32 and then at 138 even. 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. A fledgling uptrend is still in place on the daily
bar chart, but now just barely. 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 bearish early today. Shorter-term
resistance lies at the overnight high of 118.21.5 and then
at 118.28.0. Buy stops likely reside just above those
levels. Shorter-term technical support lies at the
overnight low of 118.15.0 and then at 118.10.0. 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 higher and hit a contract
and multi-month high overnight. 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 to bullish early today. The dollar index finds
shorter-term technical resistance at the overnight high of
96.850 and then at 97.000. Shorter-term support is seen at
the overnight low of 96.660 and then at Tuesday’s low of
96.395. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
December Nymex crude oil prices are firmer in early U.S.
trading. 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
bullish early today. Look for buy stops to reside just above
technical resistance at the overnight high of $67.00 and
then at this week’s high of $67.95. Look for sell stops just
below technical support at this week’s low of $65.33 and
then at $65.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were mixed overnight. Not much new this
week. The grain market bears still have the overall near-
term technical advantage. The upside will continue to be
limited in the next few weeks by big U.S. corn and soybean
crops being harvested, and tepid world demand for U.S.
wheat. Any progress on the U.S.-China trade war front would
be bullish for the grains, but an escalation would be
bearish.
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
