Monday, October 22–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight. Asian
shares gained overnight, led by China’s stock market
rallying more than 4% as Chinese economic officials said
they are prepared to stimulate the economy, including
cutting personal taxes. European stock markets were also up,
but worries remain regarding Italy’s budget problems with
the European Union, and with Brexit concerns. U.S. stock
indexes are pointed toward firmer openings when the New York
day session begins.
The U.S.-China trade war remains in focus after Trump
administration economic advisor Larry Kudlow said China is
doing “nothing” to mitigate the matter. Reports last week
said President Trump and Chinese leader Xi Jinping will meet
at the G20 conference in Argentina in late November.
Thursday’s European Central Bank regular monetary policy
meeting will be closely watched by the marketplace. No
change in EU monetary policy is expected, but ECB chief
Mario Draghi’s press conference could provide clues on
future moves by the central bank. Also, Draghi could comment
on the rift between Italy’s new government and the EU.
The U.S. economic highlight this week will be the first
estimate of third-quarter GDP due out Friday morning. GDP is
seen up 3.4% in the third quarter, on an annual basis.
The key outside markets today find the U.S. dollar index
slightly higher. Meantime, November Nymex crude oil prices
are near steady and just above $69.00 a barrel.
U.S. economic data due for release Monday is light and
includes the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are modestly up in
early U.S. trading. Recent price action still 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 Friday’s high of 2,800.50 and then at last 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 2,749.75 and then at 2,732.00. Sell
stops are likely located just below those levels. Wyckoff’s
Intra-day Market Rating: 5.5
December Nasdaq index December futures: Prices are firmer in
early U.S. trading. Recent price action still 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 7,057.00 and then at 7,000.00. 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 higher in early
U.S. trading today. Bears have the solid overall near-term
technical advantage as a two-month-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
early today. Shorter-term technical resistance is seen at
the overnight high of 138 3/32 and then at 138 16/32. Buy
stops likely reside just above those levels. Shorter-term
support lies at last 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: 5.5
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 two-month-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
early today. Shorter-term resistance lies at the overnight
high of 118.02.0 and then at last week’s high of 118.09.5.
Buy stops likely reside just above those levels. Shorter-
term technical support lies at the overnight low of
117.28.0 and then at last 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 slightly up in early U.S.
trading. Bulls have the solid overall near-term technical
advantage. The shorter-term moving averages for the dollar
index are neutral early today, as the 4-day is above the 9-
day. The 9-day is even with 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 October high of 95.840 and then
at 96.000. Shorter-term support is seen at the overnight low
of 95.205 and then at 95.000. Wyckoff’s Intra Day Market
Rating: 5.5
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly up on a mild
corrective, short-covering bounce after hitting a four-week
low last 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 $70.00 and then at $71.00. Look for
sell stops just below technical support at last 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 to firmer overnight. Bulls
faded late last week. Still, market bottoms look to be in
place for all three major grain markets, but the upside is
limited by big U.S. corn and soybean crops being harvested,
and tepid world demand for U.S. wheat.
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
