Thursday, October 11–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were hammered lower overnight,
following the U.S. stock-market pounding that took place
Wednesday. China’s stock market dropped over 5% and hit a
four-year low overnight. U.S. stock indexes are poised for
sharply lower openings and will be at three-month lows when
the New York day session begins. You were warned in this
report on Monday that the U.S. stock indexes were showing
clues of topping out. Price action Wednesday and today
strongly suggest the U.S. stock indexes have put in near-
term tops, if not major tops.
The sharp decline in the Chinese yuan against the U.S.
dollar is in focus again late this week. The depreciating
yuan makes China’s exports cheaper on the world market, but
it also invites capital outflows from China. The U.S. has
warned China about using its currency to gain world trade
advantages.
The keen risk aversion now in the marketplace is also due
in part to rising world government bond yields, with the
implications being rising inflation along with the negative
impact on global stock markets. U.S. Treasury prices are
actually higher today, on safe-haven demand.
Gold prices are sporting good gains and are back above
$1,200.00 in early U.S. trading, also on safe-haven demand.
Discussion among traders and investors now is whether the
Fed will take its foot off the gas on raising U.S. interest
rates. President Trump on Wednesday, following the U.S.
stock market sell-off, said “the Fed is making a mistake”
and “I think the Fed has gone crazy.” Such rhetoric from
the U.S. president will surely garner the attention of the
Fed’s FOMC members who set interest rate policy.
The key outside markets today find the U.S. dollar index
lower. Meantime, November Nymex crude oil prices are also
lower and trading below $72.00 a barrel on concerns about
slowing world economic growth that would mean less demand
for oil.
U.S. economic data due for release Thursday includes the
weekly jobless claims report, real earnings, the consumer
price index, monthly retail chain store sales, and the
weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are sharply lower
and hit a three-month low in early U.S. trading. 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 bearish early today. Today,
shorter-term technical resistance comes in at the overnight
high of 2,785.50 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 2,747.25
and then at 2,725.00. Sell stops are likely located just
below those levels. Wyckoff’s Intra-day Market Rating: 3.0
December Nasdaq index December futures: Prices are sharply
lower and hit a 4.5-month low in early U.S. trading. 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 bearish early today. Shorter-term
technical resistance is seen at the overnight high of
6,925.50 and then at 6,950.00. Buy stops likely reside just
above those levels. On the downside, short-term support is
seen at the overnight low of 6,925.50 and then at 6,900.00.
Sell stops are likely located just below those levels.
Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher in early U.S.
trading today on short covering and safe-haven demand. Bears
still 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 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 neutral to bullish early today.
Shorter-term technical resistance is seen at the overnight
high of 138 18/32 and then at 139 even. Buy stops likely
reside just above those levels. Shorter-term support lies at
the overnight low of 137 31/32 and then at 137 even. Sell
stops likely reside just below those levels. Wyckoff’s
Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S.
trading, on some safe-haven demand. Bears still 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 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 neutral to bullish early today.
Shorter-term resistance lies at the overnight high of
118.12.0 and then at 118.16.0. Buy stops likely reside just
above those levels. Shorter-term technical support lies at
the overnight low of 118.03.0 and then at 118.00.0. Sell
stops likely reside just below those levels. Wyckoff’s
Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is lower in early U.S.
trading. Bulls still have the firm overall near-term
technical advantage. The shorter-term moving averages for
the dollar index are neutral early today, as the 4-day is
even with 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 the overnight high of 95.125 and
then at Wednesday’s high of 95.470. Shorter-term support is
seen at 94.600 and then at 94.000. Wyckoff’s Intra Day
Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower and hit a two-week
low in early U.S. trading. The bulls have the overall near-
term technical advantage but are fading late this week. The
shorter-term moving averages 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 (RSI and slow
stochastics) are bearish early today. Look for buy stops to
reside just above technical resistance at the overnight high
of $72.76 and then at $73.00. Look for sell stops just below
technical support at the overnight low of $71.63 and then at
$71.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were weaker overnight amid the keen
risk aversion in the marketplace. Traders are awaiting
Thursday’s monthly USDA supply and demand report, which is
not expected to be bullish. 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.
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
