Thursday, October 10–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

There is a general “risk-on” attitude in the market place Thursday morning as there is some hope that Democrats and Republicans in the U.S. Congress can very soon agree on a budget/debt ceiling plan that would reopen the partially closed government and raise its borrowing limit. Reports overnight said President Obama will meet with U.S. House Republican members Thursday. Many markets also could be posting a slightly delayed bullish reaction to the news Wednesday that President Obama nominated Janet Yellen to succeed Ben Bernanke as chairman of the Federal Reserve. She is expected to be easily confirmed by the U.S. Congress. Yellen is perceived by the market place to be a monetary policy “dove.” Wednesday afternoon’s release of the latest FOMC minutes from the Federal Reserve’s meeting last month has been quickly digested by the market place. The minutes revealed a divisive committee, with the doves and hawks pleading their case. The committee expressed concern about shocks to the market place, including the U.S. budget impasse and looming debt ceiling. The majority of the FOMC members also reckoned the Fed would begin to scale back its monthly bond-buying program yet this year. However, that was before the U.S. government shutdown that has gripped the markets the past week. Now, many Fed watchers believe “tapering” of U.S. quantitative easing will not begin until sometime in 2015. U.S. economic data due for release Thursday includes the weekly jobless claims report and ICSC chain store sales trends. The G-20 finance ministers and central bankers meeting gets under way Thursday in Washington. Three U.S. Federal Reserve governors are scheduled to speak Thursday. FOMC minutes, the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report. Most U.S. government economic data is not being released due to the U.S. government closure.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are solidly higher in early U.S. trading, on short covering after prices hit a four-week low on Wednesday. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 Tuesday’s high of 1,671.20 and then at this week’s high of 1,678.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,650.00 and then at this week’s low of 1,640.50. 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 on short covering after hitting a four-week low on Wednesday. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at 3,175.00 and then at 3,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,132.75 and then at this week’s low of 3,110.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.

Dow futures: Prices are solidly higher early today on short covering after prices hit a 3.5-month low Wednesday. Buy stops likely reside just above technical resistance at 14,900 and then at 14,950. Sell stops likely reside just below technical support at 14,800 and then at 14,775. Shorter-term moving averages are bearish early today, as the 4-day moving average is below 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 neutral 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 and hit a two-week low amid a better risk appetite in the market place. Bears have the 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. 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 132 20/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 6/32 and then at 132 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 and hit a two-week low early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 126.00.0 and then at the overnight high of 126.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.22.0 and then at 125.16.0. 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 near steady early today and pausing after the solid gains posted on Wednesdsay. Bears remain in overall near-term technical command. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.685 and then at Wednesday’s high of 80.865. Shorter-term support is seen at 80.285 and then at 80.000. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

November Nymex crude oil prices are firmer early today. Bears have regained the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. In November Nymex crude, look for buy stops to reside just above resistance at $102.50 and then at $103.00. Look for sell stops just below technical support at the overnight low of $101.39 and then at $101.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were firmer overnight on mostly short covering and the better risk appetite in the market place Thursday morning. Harvest is at full speed in most areas of the Corn Belt and there are reports of better-than-expected yields for corn and soybeans coming from Iowa and Illinois, which is bearish. With much of USDA still closed, there remains a lack of fresh fundamental news for grain traders to digest, and that also favors the bearish camp due.