Stock Market Bulls are Spooked Heading into Weekend

* Latest Market Developments *

In overnight news, Asian and European stock markets followed Wall Street’s Thursday lead to trade lower Friday. European stocks also were pressured by a downbeat German consumer confidence report Friday. U.S. stock indexes are slightly higher in pre-opening electronic trading Friday morning, following the sharp losses posted on Thursday.

The stock market traders and investors are nearly half-way through the historically turbulent months of September and October. Thursday’s selling pressure in U.S. stocks has stock market bulls increasingly worried about price action the next few weeks.

On the geopolitical front, the U.S. military continues to strike the ISIS terrorists in Syria. It would not be surprising to see some heightened risk aversion in the market place as the trading session progresses Friday, heading into the weekend.

There is an important U.S. economic report due for release Friday: the third-quarter GDP estimate, which is expected to show an annual growth rate of 4.6%. That’s a lofty number and I would not be surprised to see a miss to the downside on it. The other report out Friday is the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 6.0 (The risk aversion seen earlier this week, due to U.S. airstrikes against ISIS terrorists in Syria, has waned significantly. However, risk aversion could pick up later today, heading into the weekend.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral. 

–Jim Wyckoff

U.S. STOCK INDEXES

S&P 500 December e-mini futures: Prices are slightly higher in early trading. Bulls faded badly Thursday and do not want to see a bearish weekly low close on Friday. 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 neutral early today. Today, shorter-term technical resistance comes in at 1,968.00 and then at 1,975.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 1,957.75 and then at 1,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher in early trading today. Bulls faded badly Thursday. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 4,020.00 and then at 4,035.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 4,000.00 and then at 3,985.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

Dow futures: Prices are slightly higher in early U.S. trading, on a corrective bounce from Thursday’s shellacking. Bulls faded badly Thursday and do not want to see a bearish weekly low close on Friday. Buy stops likely reside just above technical resistance at 16,955 and then at 17,000. Sell stops likely reside just below technical support at 16,900 and then at Thursday’s low of 16,870. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are firmer early today and hit a three-week high overnight. Bulls have gained upside momentum late this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 138 7/32 and then at 138 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 137 24/32 and then at 137 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 December U.S. T-Notes: Prices are firmer in early trading and hit a two-week high overnight. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 124.29.5 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.23.0 and then at 124.20.0. 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 higher in early trading and hovering near Thursday’s contract and four-year high. Bulls have the strong overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the contract high of 85.615 and then at 85.750. Shorter-term support is seen at the overnight low of 85.235 and then at 85.000. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

November Nymex crude oil prices are firmer early today, on more short covering. Bears still have the overall near-term technical advantage as prices are in a three-month-old downtrend on the daily bar chart. Look for buy stops to reside just above technical resistance at this week’s high of $93.54 and then at $94.00. Look for sell stops just below technical support at the overnight low of $92.23 and then at $92.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were mostly weaker in overnight trading. Markets set new contract lows on Thursday. There are still no significant, early technical clues to suggest market bottoms are close at hand. A look at the longer-term weekly and monthly charts for the grains shows prices can still fall significantly farther before nearing historically significant support levels.