* Latest Market Developments *
(Follow me on Twitter: @jimwyckoff)
In overnight news, the World Gold Council reported Thursday that worldwide demand for gold dropped by 2% from the same reporting period last year. Chinese demand for gold jewelry dropped sharply in the third quarter, but demand from India rose sharply in the period. I’m going to repeat some sage advice given by Warren Buffet: “Be greedy when others are fearful and be fearful when others are greedy. Well, the gold market traders and investors are mostly in a fearful mood at present. Studying markets’ price history shows the present bust in gold will at some point turn into a value-buying opportunity—before the boom cycle begins. I’m not going too far out on a limb in forecasting gold prices will reach record highs in less than 10 years, and maybe in less than five.
China industrial production in October was reported at up 7.7% year-on-year, which is below the 8% rise that was expected. This latest economic data falls in line with Chinese economic reports that have mostly missed to the downside of expectations. While China’s economic readings are still the envy of major industrial countries, the robust growth seen in recent years is decelerating.
A European Central Bank survey showed that forecasters see this year’s European Union overall inflation rate at 0.5% and see 2015 inflation coming in at 1.0%. They see EU inflation in 2016 at 1.4%. All these figures are still well below the 2.0% inflation rate the ECB has targeted.
Reports Wednesday said a Russian military convoy was headed for the Russia-Ukraine border. Markets did not pay a whole lot of attention to that news. However, the Russia-Ukraine conflict could move from the back burner of the market place to the front burner in a hurry. Such would very likely be supportive for safe-have assets such as gold and U.S. Treasuries.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement. Fed chief Janet Yellen also makes a speech at an economics forum.
Wyckoff’s Daily Risk Rating: 5.0 (Geopolitical risks have been moved to the back burner of the market place…for now.)
(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.
–Jim Wyckoff
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are firmer in early trading and hit another record high overnight. 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 early today. Today, shorter-term technical resistance comes in at the overnight record high of 2,043.75 and then at 2,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,033.50 and then at this week’s low of 2,021.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are higher in early trading and hit another 14-year high overnight. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 4,211.00 and then at 4,225.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,197.50 and then at Wednesday’s low of 4,167.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
Dow futures: Prices are firmer in early U.S. trading and hit another record high overnight. Buy stops likely reside just above technical resistance at 17,650 and then at 17,700. Sell stops likely reside just below technical support at 17,550 and then at this week’s low of 17,500. Shorter-term moving averages are bullish 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: 6.0
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly lower early today. Bulls and bears are on a level near-term technical playing field. 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 neutral early today. Shorter-term technical resistance is seen at 141 16/32 and then at Wednesday’s high of 141 24/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 140 22/32 and then at this week’s low of 140 17/32. 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 in early trading. 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 neutral early today. Shorter-term resistance lies at 126.16.0 and then at Wednesday’s high of 126.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.05.0 and then at this week’s low of 126.02.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is weaker in early trading, on profit taking. Prices are still hovering near the recent contract and four-year high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 88.00 and then at this week’s high of 88.155. Shorter-term support is seen at Wednesday’s low of 87.470 and then at this week’s low of 87.210. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
December Nymex crude oil prices are lower in early U.S. trading. Prices are hovering just above a three-year low scored in early November. Bears remain in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at the overnight high of $77.16 and then at $78.00. Look for sell stops just below technical support at the November low of $75.84 and then at $75.99. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were higher in overnight trading. A strong rally in soybean futures this week has energized all the grain market bulls. Recent price action suggests all of the big, bearish supply news may now be factored into grain futures prices. The grain market bulls are enjoying price uptrends on the daily bar charts.
