Tuesday, October 1–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
The U.S. government is now partially shutting down as the October 1 deadline for a government budget plan was not met by U.S. lawmakers. The market place is greeting the news with mild risk aversion so far Tuesday. However, if this latest U.S. government debacle drags on, many markets will become more skittish. Presently, most of the market place expects the U.S. government shutdown to be short-lived. In mid-October the U.S. government will hit its borrowing limit. If that matter cannot be agreed upon by U.S. lawmakers in a timely manner, it could be a much bigger event for the market place than the current budget impasse. Fresh budget news coming out of Washington Tuesday could be market-sensitive. The other factor causing some risk aversion in the market place early this week is turmoil in the Italian government regarding a scandal involving former prime minister Berlusconi. Many Italian government officials have resigned. Gold is seeing some safe-haven buying interest due to the U.S. budget and spending debacle. The U.S. dollar index and crude oil prices are weaker on the lack of progress on the U.S. budget. In other overnight news, the Markit purchasing managers index (PMI) for the European Union fell to 51.1 in September from 51.4 in August. A reading above 50.0 suggests economic growth. The EU PMI shows the bloc’s economic recovery is still fragile. It was also reported Tuesday the overall unemployment rate in the EU was 12% in August—the same as in July. China is observing the Golden Week holiday and market activity in the world’s second-largest economy will be quiet the rest of the week. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. manufacturing PMI, construction spending, the ISM manufacturing report on business, the global manufacturing PMI and domestic auto industry sales.–Jim U.S.
STOCK INDEXES
S&P 500 futures: Prices are firmer early today. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 1,683.80 and then at 1,695.20. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,676.20 and then at Monday’s low of 1,667.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are higher early today. The bulls still 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 neutral early today. Shorter-term technical resistance is located at the overnight high of 3,230.25 and then at the September high of 3,241.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,214.75 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 firmer early today. Bulls have faded. Buy stops likely reside just above technical resistance at 15,140 and then at 15,200. Sell stops likely reside just below technical support at 15,046 and then at 15,000. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish 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 seeing a corrective and profit-taking pullback from recent gains. The bulls still have some upside near-term technical momentum. 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 neutral to bearish early today. Shorter-term resistance lies at 133 even and then at the overnight high of 133 14/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 22/32 and then at 132 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 December U.S. T-Notes: Prices are lower early today on profit taking and a technical correction after hitting a three-month high Monday. The bulls still have some upside technical momentum. 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 bearish early today. Shorter-term resistance lies at the overnight high of 126.14.0 and then at Monday’s high of 126.21.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.00.0 and then at 125.25.0 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 lower early today and hit a fresh eight-month low overnight. Bears remain in overall near-term technical command. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.410 and then at Monday’s high of 80.490. Shorter-term support is seen at the overnight low of 79.955 and then at 79.750. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
November Nymex crude oil prices are near steady early today after hitting a seven-week low Monday. Bears have downside near-term technical momentum. In November Nymex crude, look for buy stops to reside just above resistance at $103.00 and then at $104.00. Look for sell stops just below technical support at the overnight low of $101.84 and then at Monday’s low of $101.05. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Markets were mostly weaker overnight. Corn and soybeans are still feeling the bearish effects of Monday’s bearish USDA quarterly grain stocks report. The “risk-off” mentality in the market place this week is also a bearish underlying factor for the grains. U.S. harvest progress in soybeans are corn will likely progress rapidly this week, and that’s also bearish. Wheat bulls are making a good upside progress. There are technical clues the wheat markets have put in major lows.
