Monday, September 30–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
It’s a “risk-off” trader and investor mentality in the world market place Monday. The main focus of the market place is on the U.S. budget impasses that threatens to shut down part of the U.S. government Tuesday—which would be the first government shutdown in 17 years. The weekend saw no apparent progress made by legislators on the matter. Also, in mid-October the U.S. government will hit its borrowing limit. These issues are presently an underlying bearish factor for many markets and could become a major bearish factor in the next couple weeks, if no progress is made among U.S. lawmakers and the Obama administration. Gold may be seeing some buying interest due to safe-haven demand amid the U.S. budget and spending debacle. However, it can be argued recent selling pressure in gold was because it acted more like a raw commodity ahead of the U.S. budget deadlines. It’s likely one of these scenarios will more clearly come to the forefront for gold early this week. The other factor causing a “risk-off” day in the market place Monday is turmoil in the Italian government that threatens to collapse it. Italian stocks and bonds were under pressure Monday. Monday is also the last day of the month and of the quarter, which could make for more active market activity as traders square their books. China markets are closed the rest of this week for the annual Golden holiday. In economic news overnight, European Union inflation fell to its lowest level in over three years in September. Consumer inflation rose by 1.1%, year-on-year, in the Euro zone. This news bolsters the European Central Bank’s case that it could pump more money into the EU financial system and still not spark inflationary problems. In an important development for many markets, Friday afternoon President Obama said he talked on the telephone with the Iranian president, regarding Iran’s pledge not to make nuclear weapons and both countries working to establish more normal relations—after more than 30 years of animosity. A thawing in U.S.-Iran relations, a de-escalation of the Syria-U.S. confrontation over its chemical weapons and the surprising progress the U.S. had made the past few years on dramatically increasing its own crude oil production all suggest the Middle East may become less of a powder keg for world markets in the coming months, or longer. Others would argue the notion of a stable Middle East is still just a pipe dream. Reports Monday said the Chinese government will relax its restrictions on public trading of gold, allowing more public and business participation in gold trading. U.S. economic data due for release Monday includes the Chicago Fed midwest manufacturing index, the ISM Chicago business survey, and the Texas manufacturing survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are lower early today and hit a fresh three-week low overnight. Bulls are fading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 the overnight high of 1,676.90 and then at 1,685.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,667.00 and then at 1,660.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
Nasdaq index futures: Prices are lower early today. The bulls still have the overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-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 located at the overnight high of 3,212.25 and then at 3,225.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,189.00 and then at 3,175.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
Dow futures: Prices are lower early today. Bulls are fading. Buy stops likely reside just above technical resistance at 15,100 and then at 15,140. Sell stops likely reside just below technical support at 15,000 and then at 14,950. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer early today and hit a nine-week high overnight. The bulls have upside near-term technical momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133 25/32 and then at 134 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 9/32 and then at 133 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 December U.S. T-Notes: Prices are firmer early today and hit a three-month high overnight. The bulls have upside technical momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 126.21.5 and then at 127.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.11.5 and then at 126.00.0 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 near steady early today. Bears remain in overall near-term technical command. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.490 and then at last week’s high of 80.760. Shorter-term support is seen at last week’s low of 80.205 and then at the September low of 80.155. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower early today and hit a fresh six-week low overnight. Bears have downside near-term technical momentum. In November Nymex crude, look for buy stops to reside just above resistance at $102.00 and then at the overnight high of $102.54. Look for sell stops just below technical support at $101.00 and then at the August low of $100.80. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were mixed overnight. The “risk-off” mentality in the market place is a bearish underlying factor for the grains. U.S. harvest progress in soybeans are corn will likely progress rapidly this week, and that’s also bearish. Wheat bulls are making a good upside progress. There are technical clues the wheat markets have put in major lows. Traders are looking ahead to Monday’s USDA quarterly grain stocks report. That report is expected to be bearish for corn and soybeans.
