Wednesday, October 16–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
The U.S. government remains partially closed on day 16. The U.S. Congress and President Obama are bumping right up against the Thursday deadline for which the U.S. Treasury says it will begin to run out of cash to pay its bills. The sticking point appears to be the House of Representatives’ conservative Republicans who refuse to work with the Senate. Meetings between U.S. lawmakers will be ongoing Wednesday, to try to get a last-minute agreement on the U.S. budget and debt ceiling that would reopen the U.S. government. The present sense of the market place is that a U.S. budget/debt deal will still be reached before the Thursday deadline. Such is pretty much what the market place had expected all along—a last-minute compromise. However, traders and investors worldwide are becoming more anxious as Thursday approaches and still no deal. If no deal is reached by U.S. lawmakers by the end of Wednesday, or if negotiations between congressional leaders break down, serious strains in the markets would very quickly surface, including keen safe-haven demand for gold. That scenario appeared unlikely Tuesday, but on Wednesday morning anxiety in the market place is on the rise. It could be a volatile day in the markets on Wednesday and/or Thursday. The Fitch ratings agency late Tuesday placed U.S. debt on watch and warned it could downgrade the U.S. credit rating if no agreement on the budget and debt ceiling is reached soon. In another sign of keener risk aversion worldwide, the German government auctioned a two-year treasury note Wednesday and there was very strong demand for it—the strongest demand in over two years. German debt is considered a safe-haven asset by European investors. European and Asian markets were on hold Wednesday, amid the U.S. budget/debt impasse and the looming Thursday U.S. debt ceiling deadline. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the NAHB housing market index, Treasury international capital data, and the Fed’s beige book.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are firmer in early U.S. trading. 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 early today. Today, shorter-term technical resistance comes in at this week’s 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 Tuesday’s low of 1,689.50 and then at this week’s low of 1,681.40. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are firmer early today and hovering near this week’s 13-year high. 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 neutral early today. Shorter-term technical resistance is located at this week’s high of 3,263.50 and then at 3,275.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 3,234.00 and then at 3,220.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
Dow futures: Prices are higher early today. Buy stops likely reside just above technical resistance at 15,200 and then at Tuesday’s high of 15,230. Sell stops likely reside just below technical support at Tuesday’s low of 15,095 and then at this week’s low of 15,065. Shorter-term moving averages are neutral early today, as the 4-day moving average is above 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: 5.5
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker early today and hit another fresh three-week low overnight. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 132 4/32 and then at Tuesday’s high of 132 18/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131 21/32 and then at 131 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 December U.S. T-Notes: Prices are slightly lower early today and hit another fresh three-week low overnight. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 125.28.5 and then at Tuesday’s high of 126.02.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.18.0 and then at 125.10.0. 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 weaker early today. Bears remain in overall near-term technical control. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.680 and then at the October high of 80.865. Shorter-term support is seen at this week’s low of 80.200 and then at 80.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
November Nymex crude oil prices are slightly higher early today on tepid short covering. Bears still 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 this week’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: 5.0
GRAINS
Markets were firmer overnight on short covering. Corn and soybean harvesting is progressing in the U.S. Corn Belt this week, but rains in part of the region have delayed it. With much of USDA still closed, remains a serious lack of fresh fundamental news for grain traders. Technically, the corn bears are still in command, soybean bears have the slight chart advantage, and wheat bulls possess the slight near-term technical advantage.
