Wednesday, October 23–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
Overnight trading was uneventful. Asian and European stock markets were pressured following the weak U.S. jobs data released Tuesday morning. Traders cited the uncertainty of the U.S. economy’s health as prompting some selling interest in Asian and European equity markets—despite the U.S. stock market’s rally following the jobs news Tuesday. The U.S. employment report bolstered notions the Federal Reserve will not be “tapering” its monthly bond-buying program, also called quantitative easing, any time soon. It will likely be at least the second quarter of 2014 before the Fed makes any significant changes in its monetary policy. That scenario is at least a temporary bullish factor for many markets, including stock indexes, the precious metals and the raw commodity sector. Reason: The extra money being printed by the Fed will seek out investment assets. However, that’s also a potential price inflation problem down the road. Starting in November the European Central Bank will start stress tests on 130 financial institutions in the European Union. It’s a well-known fact that EU banks have a lot of non-performing loans on their books. Recent EU economic data has painted a mixed picture, but generally the collective economies have shown slight growth to lift the bloc out of recession—but just barely. If the results of the upcoming EU bank stress tests are not positive, that could quickly erode investor confidence in the European Union’s financial system as a whole. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, import and export price indexes, the monthly house price index, the employment trends index, and the weekly DOE energy stocks report.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are weaker in early U.S. trading, on profit taking after hitting a record high Tuesday. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9- 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 1,748.50 and then at Tuesday’s record high of 1,754.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,735.40 and then at 1,726.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index futures: Prices are lower early today on profit taking following Tuesday’s 13-year high. The shorter-term moving averages (4- 9-and 18-day) are still bullish early today. The 4-day moving average is above the 9-day and 18-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 3,357.25 and then at Wednesday’s high of 3,377.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,333.50 and then at 3,325.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
Dow futures: Prices are lower early today on profit taking. Buy stops likely reside just above technical resistance at 15,400 and then at Tuesday’s high of 15,450. Sell stops likely reside just below technical support at this week’s low of 15,300 and then at 15,265. Shorter-term moving averages are bullish early today, as the 4-day moving average is above 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 neutral early today. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher early today and hit a fresh four-month high overnight. Bulls have good upside 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 bullish early today. Shorter-term resistance lies at the overnight high of 135 13/32 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134 31/32 and then at 134 26/32. 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 fresh four-month high overnight. Bulls have upside 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 to bullish early today. Shorter-term resistance lies at the overnight high of 127.24.0 and then at 128.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 127.10.0 and then at 127.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher early today and did hit another contract low overnight. Bears remain in strong overall near-term technical control. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 79.500 and then at 79.720. Shorter-term support is seen at the overnight contract low of 79.190 and then at 79.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower early today and hit a nearly four-month low overnight. Bears have the solid overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at the overnight high of $98.29. Look for sell stops just below technical support at the overnight low of $96.66 and then at $96.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were firmer overnight, on short covering in corn and soybeans and on technical buying in wheat. Harvest progress in the U.S. Corn Belt, with many higher-than-expected yields, is a bearish underlying market factor for corn and soybeans. However, decent worldwide demand for both is keeping a floor under the markets. Technically, the corn bears are in firm command, soybean bulls and bears are now on a level technical playing field, and wheat bulls have the near-term technical advantage.
