Tuesday, October 16–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight, with European
stocks mostly up and Asian stocks mostly down. U.S. stock
indexes are pointed toward firmer openings when the New
York day session begins.
European shares were lifted today by reports the new
Italian government is more or less falling in line with
European Union constricts, with the new Italian Prime
Minister saying Italy’s membership in the EU is
“unrenounceable.”
The rift between the U.S. and Saudi Arabia regarding a
missing Saudi journalist who many think was killed by the
Saudi Kingdom is still on the front burner of the
marketplace. The U.S. Secretary of State is in Saudi Arabia
talking to the king. President Trump over the weekend said
there would be “severe punishment” of the Saudi Kingdom if
it was determined it killed the journalist. Some reports
are now saying a Saudi may admit to killing the journalist.
In other overnight news, China’s consumer price index hit a
seven-month high in September—at up 0.7% from August and up
2.5%, year-on-year.
The closely watched German economic indicator, the ZEW
index, dropped to -24.7 in October from -10.6 in September.
ZEW officials said the steep drop is mostly due to worries
about world trade wars—especially the U.S. vs. China.
In a sign of the wide spread between U.S. government and
German government bond yields, the German government
auctioned a two-year note today, which fetched an average
yield of -0.56%. The U.S. two-year note is currently
yielding 2.87%.
The key outside markets today find the U.S. dollar index
slightly higher. Meantime, November Nymex crude oil prices
lower and trading just above $71.00 a barrel.
U.S. economic data due for release Tuesday includes the
weekly Goldman Sachs and Johnson Redbook retail sales
reports, industrial production and capacity utilization,
the NAHB housing index, and Treasury international capital
data. The Treasury will also issue a report on world
currency markets, but is not expected to label China a
currency manipulator.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early
U.S. trading. Recent price action strongly suggests that at
least a near-term market top is in place, if not a major
top. A bearish pennant pattern has now formed 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
neutral to bullish early today. Today, shorter-term
technical resistance comes in at Monday’s high of 2,778.75
and then at last Friday’s high of 2,785.00. Buy stops likely
reside just above those levels. Downside support for active
traders today is located at Monday’s low of 2,745.25 and
then at 2,725.00. 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. Recent price action strongly suggests a
near-term market top is in place, if not a major market top.
A bearish pennant pattern has formed on the daily bar chart.
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
Monday’s high of 7,179.00 and then at 7,200.00. Buy stops
likely reside just above those levels. On the downside,
short-term support is seen at Monday’s low of 7,060.75 and
then at 7,035.00. Sell stops are likely located just below
those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker 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 last week’s high
of 138 31/32. Buy stops likely reside just above those
levels. Shorter-term support lies at the overnight low of
138 even and then at 137 23/32. Sell stops likely reside
just below those levels. Wyckoff’s Intra-Day Market Rating:
4.5
December U.S. T-Notes: Prices are slightly 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 above 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 118.08.0 and then at last week’s high of 118.14.5.
Buy stops likely reside just above those levels. Shorter-
term technical support lies at 118.00.0 and then at
117.28.0. 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. 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
bearish early today. The dollar index finds shorter-term
technical resistance at Monday’s high of 95.060 and then at
95.470. Shorter-term support is seen at Monday’s low of
94.635 and then at 94.500. Wyckoff’s Intra Day Market
Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower in early U.S.
trading. Recent strong selling pressure still 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 bearish
early today. Look for buy stops to reside just above
technical resistance at the overnight high of $72.04 and
then at Monday’s high of $72.70. Look for sell stops just
below technical support at last week’s low of $70.51 and
then at $70.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were mixed to weaker overnight. 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—despite current harvest delays. 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
