Thursday, September 19–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
Most world stock, financial and commodity markets were cheered by the surprising news from the FOMC Wednesday afternoon. The FOMC’s decision to not taper its $85 billion-a-month bond-buying program, which is also called quantitative easing, caught the market place completely off guard. The FOMC members said they are still not convinced the U.S. economy is healthy enough to begin winding down QE. The Fed members are worried about the recent rise in U.S. interest rates choking off the fledgling economic recovery. Given the markets’ reactions to the FOMC meeting results, it appears no tapering could be at least a near-term game-changer for many markets. The printing presses of the Federal Reserve will continue to run at high speed for at least a while, or even for longer. That’s bullish for stock, bond and commodity markets as it keeps the market place awash in cash that is looking for an asset home. However, the market place has to once again try to figure out when the Federal Reserve will reduce its monthly bond buying. It could be that after a short rally in the aforementioned markets, trader and investor uncertainty due to the still-unresolved timing of any Fed monetary policy change again pervades the market place. Keener uncertainty on major issues in the market place is usually a bearish underlying factor. The looming U.S. budget and debt ceiling issues that will soon be hotly debated by the U.S. Congress and the Obama administration will become a front-burner matter for the market place, and one that is likely to be bearish for most markets, as there is already talk the U.S. government could shut down for a short time. U.S. economic data due for release Thursday includes the weekly jobless claims report, existing home sales, leading economic indicators and the Philadelphia Fed business outlook survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are higher early today and hit another record high overnight. Bulls have the solid 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 and 18-day. The 9-day is above 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 all-time high of 1,726.50 and then at 1,735.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,718.40 and then at 1,705.00. 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 and hit another fresh 12-year high overnight. The bulls have the solid 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 bullish early today. Shorter-term technical resistance is located at the overnight high of 3,235.75 and then at 3,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,224.50 and then at 3,200.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
Dow futures: Prices are higher early Thursday and hit a new all-time high overnight. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Wednesday’s high of 15,650 and then at 15,700. Sell stops likely reside just below technical support at 15,600 and then at 15,550. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are weaker early today on a corrective pullback from Wednesday’s solid gains. Bears still 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133 12/32 and then at Wednesday’s high of 133 31/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132 28/32 and then at 132 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 September U.S. T-Notes: Prices are firmer early today and poked to a fresh six-week high overnight. Bears still have the overall near-term technical advantage. However, the bulls have gained upside momentum with Wednesday’s big gains. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 125.31.0 and then at 126.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.19.5 and then at 125.16.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker early today and hit a fresh 7.5-month low overnight. Bears are in technical command. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 80.500 and then at 80.750. Shorter-term support is seen at the overnight low of 80.155 and then at 80.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
October Nymex crude oil prices are slightly higher early today on mild follow-through buying from Wednesday’s strong gains. Crude oil bulls have the solid overall near-term technical advantage. In October Nymex crude, look for buy stops to reside just above resistance at the overnight high of $108.99 and then at $110.00. Look for sell stops just below technical support at $108.00 and then at $107.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were firmer overnight, supported by the bullish effect of the FOMC news on Wednesday. Focus is on early yield reports on the harvesting of the U.S. corn and soybean crops in the Corn Belt—and on any fresh export demand for U.S. grains. Technically, the soybean bulls still have the overall advantage, while corn and wheat market bears are in firm technical command. My bias is that the corn and wheat markets do not have strong downside price potential at present levels.
