Monday, October 7–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
Asian and European markets were mostly weaker overnight, with U.S. stock indexes solidly lower in early electronic trading Monday, as the partial U.S. government shutdown enters its seventh day with still no end in sight. Now the market place is wondering if and when credit rating agencies will downgrade the U.S. government’s credit rating. Such could accelerate trader and investor anxieties. While there is growing unease in the world market place there is still not yet panic. However, as this situation drags on anxiety will continue to increase. Soon the U.S. government will also hit its debt ceiling. If that important matter cannot be agreed upon by U.S. lawmakers in a timely manner, then it could be a much bigger event for the market place than the current budget impasse. Russian President Putin and the German Bundesbank on Monday warned that President Obama needs to overcome the government debt/budget crisis very soon, or else the matter will start to impact other world economies. If risk aversion in the market place continues to increase, the odds will grow that daily price volatility will increase in many markets. Fresh U.S. budget news coming out of Washington Monday could be market-sensitive. The World Bank and International Monetary Fund hold annual meetings in Washington, D.C., at the end of this week. It would be at the very least awkward to see the host nation and the world’s leading economy and military hobbled by a government shutdown in effect. Any proclamations or overtures made by the U.S. at the meeting would be somewhat discounted by the inability of U.S. lawmakers to agree on a spending budget. China’s Golden Week holiday season is winding down and the world’s second-largest economy will be back at work in full force on Tuesday. The market place is keeping an eye on violence in Egypt that killed dozens in Cairo over the weekend. U.S. economic data due for release Monday includes consumer installment credit. A lack of fresh U.S. government economic data is also an underlying bearish factor for many markets, due to the uncertainty of the situation and no fresh indicators to gauge the U.S. economy’s health.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are lower early today. 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,678.00 and then at last week’s high of 1,692.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 1,663.60 and then at 1,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
Nasdaq index futures: Prices are lower early today. The bulls still have the overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at the overnight high of 3,226.00 and then at Friday’s high of 3,239.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,201.75 and then at 3,189.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
Dow futures: Prices are solidly lower early today and hit a four-week low overnight. Bulls have faded. 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 14,850 and then at 14,800. 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: 4.0
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer early today on some safe-haven demand. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133 16/32 and then at last week’s high of 133 29/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 5/32 and then at 133 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 December U.S. T-Notes: Prices are higher early today on safe-haven demand. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are netural early today. Shorter-term resistance lies at the overnight high of 126.17.0 and then at last week’s high of 126.27.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.09.0 and then at Friday’s low of 126.04.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is weaker early today. Bears remain in firm overall near-term technical command. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at Friday’s high of 80.285 and then at 80.500. Shorter-term support is seen at 80.000 and then at last week’s low of 79.720. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are lower early today. Bulls and bears are on a level near-term technical playing field. In November Nymex crude, look for buy stops to reside just above resistance at the overnight high of $103.59 and then at $104.00. Look for sell stops just below technical support at the overnight low of $102.50 and then at $102.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were narrowly mixed overnight. The “risk-off” mentality in the overall market place at present is a mildly bearish underlying factor for all of the grains. U.S. harvest of soybeans and corn has been delayed in much of the Corn Belt due to weekend rains, and that is just a bit bullish for those markets. With much of USDA closed, there is a keen lack of fresh fundamental news for grain traders to digest, and that favors the bearish camp due to the uncertainty of the matter. All of the above suggests sideways and choppy trading conditions in the grains this week.
