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U.S. Stock Indexes See Short-Covering Bounce

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Wednesday, October 24--Jim Wyckoff's Morning Web Log

Note: I am out of the office today. My friend and fellow analyst/trader Ken Seehusen is producing my morning report. Ken's style is a bit different than mine, but I think you'll also benefit from Ken's work.--Jim

The STOCK INDEXES

The December NASDAQ 100 was higher due to short covering overnight as it consolidates above the 50% retracement level of the June-September rally crossing at 2657.00. Stochastics and the RSI are diverging but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If December extends the decline off September's high, the 62% retracement level of the June-September rally crossing at 2606.66 is the next downside target. Closes above the 20-day moving average crossing at 2748.06 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 2710.32. Second resistance is the 20-day moving average crossing at 2748.06. First support is the 50% retracement level of the June-September rally crossing at 2757.37. Second support is the 62% retracement level of the June-September rally crossing at 2606.66.

The December S&P 500 index was higher due to short covering overnight as it consolidates some of the decline off last Thursday's high. Facebook whose earnings exceeded analyst's estimates for Mobile ads supported overnight gains. Stochastics and the RSI are diverging but remain bearish signaling that sideways to lower prices are possible near-term. If December extends this month's decline, the 38% retracement level of the June-July rally crossing at 1385.79 is the next downside target. Closes above the 20-day moving average crossing at 1436.81 would temper the near-term bearish outlook. First resistance is the 20-day moving average crossing at 1436.81. Second resistance is last Thursday's high crossing at 1459.50. First support is Tuesday's low crossing at 1402.20. Second support is the 38% retracement level of the June-September rally crossing at 1385.79.

INTEREST RATES

December T-bonds were slightly lower overnight as it consolidates some of the short covering bounce off last week's low. However, stochastics and the RSI have turning bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 148-14 are needed to confirm that a short-term low has been posted. If December renews this month's decline, August's low crossing at 145-23 is the next downside target. First resistance is the 20-day moving average crossing at 148-14. Second resistance is the reaction high crossing at 150-09. First support is last Thursday's low crossing at 146-05. Second support is August's low crossing at 145-23.

ENERGY MARKETS

December crude oil was higher due to short covering overnight as it consolidates some of the decline off last Friday's high. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If December extends the decline off September's high, the 75% retracement level of the June-September rally crossing at 84.64 is the next downside target. Closes above the 20-day moving average crossing at 91.11 would confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 91.11. Second resistance is the reaction high crossing at 94.02. First support is Tuesday's low crossing at 85.69. Second support is the 75% retracement level of the June-September rally crossing at 84.64.

CURRENCIES

The December Dollar was higher overnight as it extends the rebound off last week's low. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If December extends the aforementioned rebound, this month's high crossing at 80.31 is the next upside target. Closes below last week's low would open the door for a possible test of September's low crossing at 78.72 later this fall. First resistance is this month's high crossing at 80.31. Second resistance is the 38% retracement level of the July-September decline crossing at 80.97. First support is last Wednesday's low crossing at 78.97. Second support is September's low crossing at 78.72.

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About the Author

JimWyckoff

Jim Wyckoff has been involved with the stock, financial and futures markets for more than 20 years. He was born and raised in Iowa, where he still resides.

Wyckoff became a financial journalist with Futures World News for many years, cutting his teeth as a reporter on the futures trading floors in Chicago and New York, where he covered every futures market traded in the United States at one time or another.

Not long after he began his career in financial journalism, he began studying technical analysis. By studying chart patterns and other technical indicators, he realized this approach to analyzing and trading markets could level the playing field between “professional insiders” in the markets and individual traders.

His extensive studies of technical analysis and knowledge of markets led to several positions, including chief technical analyst at several well-known companies. He says his mission is not just to generate profits for traders but to also provide them with educational and insightful information because, in the fascinating business of trading, one never stops learning.

Wyckoff received a Bachelor of Science degree at Iowa State University, graduating in 1984 with a major in journalism and a minor in economics. He and his wife have two children, a son in high school and a daughter in college.

When he’s not analyzing markets and educating traders, Wyckoff says he loves adventures, from driving a Jeep across the highest mountain pass in the continental United States to extreme winter camping in the Boundary Waters to hiking in the jungles of South America.

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