Thursday, October 4–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight, pressured
by rising world government bond yields and continued
strong-greenback pressure on the secondary currency
markets. U.S. stock indexes are pointed toward weaker
openings when the New York day session begins. Chinese
markets are still closed this week for a public holiday but
will reopen Friday.
A feature in the marketplace late this week is rising U.S.
Treasury yields that saw the benchmark 10-year note yield
rise to a seven-year high above 3.20% today. Strong U.S.
economic data recently is driving U.S. bond and note prices
lower. Other world government bond markets are also seeing
their yields rise, in sympathy to the U.S. This is yet
another clue that creeping price inflation could become
problematic down the road. That’s a bullish scenario for
hard assets like raw commodities, and bearish for paper
assets like stocks and bonds.
Traders are looking ahead to the U.S. Labor Department’s
Employment Situation Report for September on Friday morning—
arguably the most important U.S. data point of the month.
The key non-farm payrolls number is expected to come in up
180,000. Wednesday’s U.S. ADP national employment report for
September showed a gain of 230,000 jobs, which hints that
Friday’s employment report will come in stronger than
expected.
The key outside markets today find the U.S. dollar index
firmer and hitting a six-week high overnight, amid rising
U.S. government bond yields that are attracting more
foreign investors. Meantime, November Nymex crude oil
prices are near steady after hitting a four-year high
Tuesday. Prices are trading just above $76.00 a barrel.
U.S. economic data due for release Thursday includes the
weekly jobless claims report, the Challenger job-cuts
report, and manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early
U.S. trading but 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 bearish early today. Today, shorter-term
technical resistance comes in at overnight high of 2,926.25
and then at the contract high of 2,947.00. Buy stops likely
reside just above those levels. Downside support for active
traders today is located at the overnight low of 2,913.25
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: 4.5
December Nasdaq index December futures: Prices are lower but
not too 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 still
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 bearish
early today. Shorter-term technical resistance is seen at
the overnight high of 7,651.00 and then at 7,700.00. Buy
stops likely reside just above those levels. On the
downside, short-term support is seen at the overnight low of
7,602.25 and then at 7,550.00. Sell stops are likely located
just below those levels. Wyckoff’s Intra-Day Market Rating:
4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are solidly lower and hit a
contract low in early U.S. trading today. Bears have the
solid overall near-term technical advantage as an
accelerating five-week-old downtrend is in place on the
daily chart. 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 bearish early today.
Shorter-term technical resistance is seen at the overnight
high of 138 7/32 and then at 139 even. Buy stops likely
reside just above those levels. Shorter-term support lies at
the overnight contract low of 137 8/32 and then at 137 even.
Sell stops likely reside just below those levels. Wyckoff’s
Intra-Day Market Rating: 3.0
December U.S. T-Notes: Prices are solidly lower and hit a
contract low in early U.S. trading. Bears have the solid
overall near-term technical advantage. Prices are in an
accelerating five-week-old downtrend on the daily bar
chart. 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 bearish early
today. Shorter-term resistance lies at the overnight high
of 118.00.0 and then at 118.08.0. Buy stops likely reside
just above those levels. Shorter-term technical support
lies at the overnight contract low of 117.19.5 and then at
117.16.0. Sell stops likely reside just below those levels.
Wyckoff’s Intra-Day Market Rating: 3.0
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer and hit a six-week
high overnight. Bulls have upside momentum and 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 bullish early
today. The dollar index finds shorter-term technical
resistance at the overnight high of 95.780 and then at
96.000. Shorter-term support is seen at 95.250 and then at
95.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady and not far
below 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 $76.90 and then at $77.50. 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 slightly up 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
