* Latest Market Developments *
Markets were generally quieter in overnight trading, as traders and investors await the results of the latest Federal Open Market Committee (FOMC) meeting of the U.S. Federal Reserve. The meeting began Tuesday morning and ends Wednesday afternoon with a statement. As usual, the statement will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called quantitative easing. Traders will also be looking for clues in the statement about future direction of monetary policy, including at what point the Fed will start to raise U.S. interest rates. Most market watchers expect the FOMC statement to favor the dovish side of monetary policy, so the surprise to the market place would be if the Fed statement is more hawkish than expected. The past several meetings have tended to produce immediate and significant price reactions from the markets.
In overnight news, the German government auctioned a 10-year bund Wednesday and it fetched a record low average yield of 0.87%. Demand was so-so but the record low yield suggests European investors are still bearish on the European Union’s economic and financial conditions. Germany is the strongest EU economy and its government debt is considered the safest in the EU.
A feature in the markets the past two weeks has been the dramatic rebound in the U.S. stock indexes, which are now moving in on their record or multi-year highs scored several weeks ago. The U.S. stock indexes were left for dead on October 15, when prices hit multi-month lows amid a steep downdraft and keen investor anxiety. But the stock index bulls fought right back to produce bullish V-bottom reversals on the daily bar charts.
In other news, the International Monetary Fund reported that several world central banks continued to stock up on gold bullion in September. Russia, Azerbaijan and Kazakhstan all raised their gold holdings. Russia led the way by adding 1.2 million ounces last month, the IMF said.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement.
Wyckoff’s Daily Risk Rating: 6.0 (The market place is significantly less anxious 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 slightly lower in early trading after hitting a four-week 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-day 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 high of 1,981.50 and then at 1,990.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,965.00 and then at Tuesday’s low of 1,956.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index futures: Prices are slightly weaker in early trading, on mild profit taking after hitting a five-week high on Tuesday. 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 seen at Tuesday’s high of 4,102.00 and then at the September high of 4,116.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,074.50 and then at 4,060.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
Dow futures: Prices are near steady in early U.S. trading, on profit taking after hitting a three-week high Tuesday. Buy stops likely reside just above technical resistance at 16,950 and then at 17,000. Sell stops likely reside just below technical support at 16,900 and then at 16,850. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish early today. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are near steady early today. Bulls are fading but still have the slight overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 141 21/32 and then at 142 even. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 141 7/32 and then at 141 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 December U.S. T-Notes: Prices are slightly lower in early trading. Bulls still have the slight overall near-term technical advantage but are fading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 127.00.5 and then at this week’s high of 127.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 126.25.5 and then at 126.20.0. 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 lower in early trading. Bulls still have the overall near-term technical advantage as trading has turned choppy. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 85.750 and then at this week’s high of 85.800. Shorter-term support is seen at this week’s low of 85.290 and then at 85.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are firmer early today, on more short covering in a bear market. Bears are still in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at $82.50 and then at $83.00. Look for sell stops just below technical support at the overnight low of $81.44 and then at $81.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were higher overnight and are trading at or near multi-week highs, led by soybeans. Good China demand for soybeans has surfaced at present price levels. Grain market bulls are in the best technical postures they’ve been in for months. Fledgling price uptrends are in place and the bulls have good near-term momentum to suggest the fledgling price uptrends can be sustained.
