Monday, October 28–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
It was a quieter overnight trade Monday, amid a lack of major economic data issued overseas and as traders and investors are looking ahead to this week’s U.S. Federal Reserve’s Open Market Committee meeting. The meeting begins Tuesday and ends Wednesday at midday. The FOMC is expected to leaving U.S. monetary policy unchanged, but as usual traders and investors will be looking for any clues on the timing of changes in policy. Most in the market place believe the Fed will not start to cut back on its monthly bond purchases until early next year—most likely the second quarter at the earliest. This scenario favors the raw commodity market bulls, including the precious metals markets. Any hints at this week’s FOMC meeting that the “tapering” of monetary policy could come sooner than the second quarter of 2014 would likely be bearish for most markets. Also, beginning in November the European Central Bank starts its stress tests on major financial institutions in the EU. It’s believed that there are a lot of non-performing loans on the books of EU banks, so the stress tests and any bad results could impact the market place. Such a situation would likely be bullish for the safe-haven gold, and U.S. and German bond markets. U.S. economic data due for release Monday includes industrial production and capacity utilization, pending home sales and the Texas manufacturing outlook survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are slightly higher in early U.S. trading and hit another record high overnight. The shorter-term moving averages (4-, 9- and 18-day) are 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 neutral early today. Today, shorter-term technical resistance comes in at the overnight record high of 1,762.00 and then at 1,775.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 1,743.20 and then at last week’s low of 1,734.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are higher early today and hovering near last week’s 13-year high. The shorter-term moving averages (4- 9-and 18-day) are 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 neutral early today. Shorter-term technical resistance is located at last week’s high of 3,392.75 and then at 3,400.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,372.25 and then at 3,350.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
Dow futures: Prices are firmer early today. Buy stops likely reside just above technical resistance at 15,550 and then at 15,600. Sell stops likely reside just below technical support at 15,500 and then at Friday’s low of 15,455. 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: 5.5
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker early today. Bulls still have some 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 bearish early today. Shorter-term resistance lies at the overnight high of 135 10/32 and then at last week’s high of 135 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134 30/32 and then at 134 26/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 December U.S. T-Notes: Prices are slightly lower early today. Bulls still have some 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 to bearish early today. Shorter-term resistance lies at the overnight high of 127.19.5 and then at last week’s high of 127.25.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 127.12.0 and then at 127.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher early today on tepid short covering in a bear market after hitting a contract low Friday. 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 Friday’s high of 79.380 and then at 79.550. Shorter-term support is seen at the contract low of 79.060 and then at 79.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly lower early today. Prices last week hit a nearly four-month low. Bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just above resistance at the overnight high of $98.05 and then at $98.29. Look for sell stops just below technical support at $97.00 and then at $96.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Markets were mostly weaker overnight. Harvest progress in the U.S. Corn Belt remains a seasonally bearish market factor for corn and soybeans. It is believed that U.S. corn harvest is nearing 50% complete, while soybeans are around 80% harvested. Rain is coming to the Corn Belt in the coming days, which will delay harvesting. Wheat remains supported by Russian and South American wheat crop problems. Technically, the corn bears are in firm command, soybean bulls have the near-term technical edge, and wheat bulls also have the near-term technical advantage.
