Friday, October 19–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight. China’s
stock market rallied after the Chinese government pledged
to keep its economy on track and expressed confidence in
future growth. This comes after the Chinese stock market
dropped to a multi-year low Thursday and the Chinese yuan
dropped to a 21-month low against the U.S. dollar. U.S.
stock indexes are pointed toward firmer openings when the
New York day session begins, on modest corrective bounces
after solid losses suffered on Thursday.
In overnight news, China’s gross domestic product grew by
6.5% in the third quarter, year-on-year. That was down from
the 6.7% growth rate in the second quarter. A rate of 6.6%
was expected for the third quarter. The third-quarter
figure was the slowest economic growth pace for China in
several years.
The Euro currency has been rattled again this week by
recurring trader concerns regarding Italy falling into line
with European Union rules on country’s budgets.
And don’t be surprised if trader and investor anxiety
upticks as the trading session progresses Friday, heading
into a very uncertain weekend. This is mainly due to
pending results of an investigation into the disappearance
of a Saudi journalist that could be a murder and could
involve the Saudi Arabian government. The markets were
jolted on Thursday when U.S. Secretary Mnuchin backed out
of a high-level business conference being held in Saudi
Arabia.
The key outside markets today find the U.S. dollar index
slightly higher. Meantime, November Nymex crude oil prices
are modestly up and are trading below $69.00 a barrel.
Still, oil prices hit a four-week low on Thursday amid
concerns about worldwide economic growth that could crimp
demand for crude.
U.S. economic data due for release Friday is light and
includes existing home sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in
early U.S. trading, on an upside correction from Thursday’s
strong losses. 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 neutral
early today. The 4-day moving average is above the 9-day.
The 9-day is below the 18-day moving average. Short-term
oscillators (RSI, slow stochastics) are neutral early today.
Today, shorter-term technical resistance comes in at
2,800.00 and then at this week’s high of 2,824.25. Buy stops
likely reside just above those levels. Downside support for
active traders today is located at the overnight low of
2,771.00 and then at Thursday’s low of 2,756.50. Sell stops
are likely located just below those levels. Wyckoff’s Intra-
day Market Rating: 5.5
December Nasdaq index December futures: Prices are firmer in
early U.S. trading, on a corrective bounce from Thursday’s
strong losses. 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 neutral
early today. The 4-day moving average is above the 9-day.
The 9-day average is below the 18-day. Short-term
oscillators (RSI, slow stochastics) are neutral early today.
Shorter-term technical resistance is seen at 7,200.00 and
then at 7,250.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at the
overnight low of 7,135.50 and then at Thursday’s low of
7,094.00. 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 slightly lower in early
U.S. trading today. Bears have the solid overall near-term
technical advantage as a seven-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 above the 9-day. The 9-day is below the 18-day moving
average. Oscillators (RSI, slow stochastics) are neutral to
bullish early today. Shorter-term technical resistance is
seen at Thursday’s high of 138 13/32 and then at this week’s
high of 138 26/32. Buy stops likely reside just above those
levels. Shorter-term support lies at this week’s low of 137
15/32 and then at 137 even. Sell stops likely reside just
below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are steady in early U.S.
trading. Bears have the solid overall near-term technical
advantage. Prices are in a seven-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 bullish
early today. Shorter-term resistance lies at this week’s
high of 118.09.5 and then at 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
this week’s low of 117.25.0. Sell stops likely reside just
below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady in early U.S.
trading. 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 bullish early
today. The dollar index finds shorter-term technical
resistance at the October high of 95.840 and then at 96.000.
Shorter-term support is seen at Thursday’s low of 95.210 and
then at 95.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are firmer on a corrective,
short-covering bounce after hitting a four-week low on
Thursday. 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
early today. Look for buy stops to reside just above
technical resistance at the $70.00 and then at $71.00. Look
for sell stops just below technical support at this week’s
low of $68.47 and then at $68.00. Wyckoff’s Intra-Day Market
Rating: 5.0
GRAINS
Grain futures prices were mixed overnight. Bulls are fading
late this week and need to show fresh power soon. 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. Harvest has picked up speed in the
Corn Belt late this week as fields are drying out from the
recent heavy rains.
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
