Risk Appetite Slowly Returning to Market Place Tuesday

* Latest Market Developments *

OVERNIGHT DEVELOPMENTS

There is a bit more risk appetite in the market place Tuesday morning. Apple’s corporate earnings late Monday handily beat the street’s forecast. Meantime, China on Tuesday reported its third-quarter gross domestic product grew by 7.3%, on an annual basis. That figure was slightly better than market expectations but was still the slowest pace of growth for China in five years. There was also industrial production data out of China, which came in at up 8% in September. That figure was also above expectations. The economic data coming out of the world’s second-largest economy will be a bullish underlying factor for the raw commodity sector Tuesday.

European stock markets were supported on the aforementioned news. Asian stock markets were mixed overnight. U.S. stock indexes are firmer in early electronic trading Tuesday. Corporate earnings reports are in the spotlight for the U.S. stock market this week. The buzz in Europe is not if, but when the European Central Bank will announce a big quantitative easing plan for EU monetary policy.

The events that really spooked the market place last week—Ebola, slowing world economies and worries about another sovereign debt crisis in the European Union—have not just faded away. There are also still geopolitical hotspots in the world that could flare up quickly. Most traders and investors—especially the shorter-term ones—are like sheep and tend to follow the herd. That’s what happened in last week’s stock market sell-off, and it will happen again.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and existing home sales.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is less anxious early this week.)

(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 higher again in early trading, on more short covering and bargain hunting. The shorter-term moving averages (4-, 9- and 18-day) are nuetral 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 bullish early today. Today, shorter-term technical resistance comes in at 1,925.00 and then at 1,940.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,900.00 and then at the overnight low of 1,885.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher in early trading. Short covering and bargain hunting are featured. Shorter-term moving averages (4- 9-and 18-day) are still 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 bullish early today. Shorter-term technical resistance is seen at 3,900.00 and then at 3,925.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,875.00 and then at the overnight low of 3,848.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

Dow futures: Prices are higher in early U.S. trading, on short covering and bargain hunting. Buy stops likely reside just above technical resistance at 16,450 and then at 16,500. Sell stops likely reside just below technical support at 16,400 and then at 16,350. Shorter-term moving averages are still 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 neutral to bullish early today. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are lower early today on profit taking from last week’s strong gains. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 143 even and then at 143 16/32. Buy stops likely reside just above those levels. Shorter-term technical support is seen at 142 9/32 and then at 142 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 December U.S. T-Notes: Prices are lower in early trading, on profit taking from last week’s strong gains. Bulls still have the overall near-term technical advantage. 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 127.24.0 and then at 128.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 127.12.5 and then at 127.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The December U.S. dollar index is higher in early trading. Bulls have the overall near-term technical advantage. However, prices have been trending lower for nearly three weeks. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Monday’s high of 85.470 and then at 85.530. Shorter-term support is seen at 85.000 and then at the overnight low of 84.795. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

December Nymex crude oil prices are firmer early today as the market tries to stabilize after hitting a more-than-two-year low last week. Bears are still in firm overall near-term technical control. Look for buy stops to reside just above technical resistance at Monday’s high of $82.73 and then at $83.00. Look for sell stops just below technical support at the overnight low of $81.77 and then at Monday’s low of $80.78. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed but mostly firmer in overnight trading. It’s been a good run for harvesting in the U.S. Corn Belt the past several days. However, overall progress is still behind normal. That’s a bit bullish for corn and soybeans. Recent near-term technical developments begin to suggest market bottoms are in place in grains. Grain markets will continue to be impacted by the outside markets, which have been volatile recently but are calmer so far this week.