Tuesday, October 15–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
As the U.S. government partial closure is in day 15, it finally appears the U.S. Congress and President Obama are making substantial progress on agreeing on a budget measure that includes extending the government’s soon-to-be hit overall debt ceiling. Many believe a U.S. budget/debt deal will be announced today, as the somewhat self-imposed Thursday debt-ceiling deadline approaches. If the U.S. lawmakers do reach a deal before Thursday, it would be pretty much what the market place had expected all along—a last-minute compromise. If no deal is reached by U.S. lawmakers before Thursday, serious strains in the markets will quickly surface. But that appears unlikely. The features of the market place Tuesday morning are a sharply higher U.S. dollar index and solidly lower gold prices. U.S. stock indexes and many other world stock markets have seen sharp rallies the past few days, not only on expectations that the U.S. lawmakers would reach a last-minute budget/debt agreement, but also on ideas the U.S. Federal Reserve will keep its very easy monetary policy (quantitative easing) in place for longer than what many had been expecting up until the U.S. government shutdown. With the government closure likely crimping the U.S. gross domestic product growth to a slight degree and also rattling investor confidence, it seems the Federal Reserve was prescient in leaving its monetary policies unchanged at its last FOMC meeting a few weeks ago. Add on top of that the nomination last week of perceived monetary policy dove Janet Yellen to head up the U.S. Federal Reserve next year, and most of the market place got a good dose of bullish tonic. The dearth of U.S. economic data the past two weeks has put a damper on many markets, which could account for the generally low volatility seen during the government shutdown. The next big unknown for the market place when the U.S. government does reopen its doors is when and how will all the backed-up U.S. economic data be released, or will some of the reports just be permanently cancelled. At present there is no consensus on how this matter will play out, mainly because the government stats officials have been on furlough and probably have not yet even discussed how and when to disseminate the backed-up U.S. economic data. If much of the backed-up economic data is released in a short timeframe it could make for higher volatility in the market place, at least for a short period of time. In other overnight news, the closely watched German ZEW economic expectations index rose to a higher-than-expected 52.8 in October versus a reading of 49.6 in September. The German DAX stock index hit a record intra-day high following the upbeat economic report. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the Empire State manufacturing survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are firmer in early U.S. trading and hit a fresh four-week high. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9- and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,709.40 and then at the all-time high of 1,726.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,700.00 and then at Monday’s low of 1,681.40. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are firmer early today and hit a new 13-year high overnight. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 located at the overnight high of 3,258.25 and then at 3,275.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,249.00 and then at 3,230.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
Dow futures: Prices are firmer early today. Buy stops likely reside just above technical resistance at 15,250 and then at 15,300. Sell stops likely reside just below technical support at 15,200 and then at 15,150. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-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: 5.5
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are near steady early today and did hit a fresh three-week low overnight. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 132 16/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131 27/32 and then at 131 16/32. 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 early today and hit a fresh three-week low overnight. 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 125.29.5 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.21.0 and then at 125.16.0. 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 solidly higher early today, on short covering. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at October high of 80.865 and then at 81.000. Shorter-term support is seen at 80.500 and then at the overnight low of 80.340. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are lower early today. Bears have the overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. In November Nymex crude, look for buy stops to reside just above resistance at $102.00 and then at Monday’s high of $102.52. Look for sell stops just below technical support at last week’s low of $100.60 and then at $100.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were mixed but mostly weaker overnight. The key “outside markets” are in a bearish posture for the grains early this morning, as the U.S. dollar index is solidly higher and crude oil prices are lower. Harvest is presently at full speed in most areas of the Corn Belt. However, rains will be falling in some areas starting today. With much of USDA still closed, there was no weekly crop progress data issued Monday and there remains a lack of fresh fundamental news for grain traders to digest. Technically, the corn bears are in full command, soybean bears have the slight chart advantage, and wheat bulls possess the slight near-term technical advantage.
