* Latest Market Developments *

In overnight news, the official China purchasing managers index (PMI) was reported on Saturday and fell to 50.8 in October, from 51.1 in September. The number was slightly below expectations but was above the HSBC PMI of 50.4, which was reported Monday.  The HSBC September PMI reading was 50.2. Asian stock markets saw buying interest somewhat limited on the latest PMI reports.

The European Union manufacturing PMI was reported Monday and came in at 50.6 in October, versus expectations for a reading of 50.7 and a September figure of 50.3.

There are two big economic data points this week: the monthly meeting of the European Central Bank on Thursday and the U.S. employment situation report on Friday. U.S. mid-term elections also take place on Tuesday.

The U.S. dollar index hit a four-year high overnight. This key “outside market” and its recent price strength have been a significant bearish weight on many raw commodity markets, including the precious metals and energy markets. Crude oil prices are hovering near a two-year low at present.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, construction spending, the ISM manufacturing report on business, the global manufacturing PMI, and domestic auto industry sales.

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 slightly lower in early trading and seeing mild profit taking after hitting a record high on Friday. 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 record high of 2,016.75 and then at 2,025.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,000.00 and then at Friday’s low of 1,986.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly lower in early trading and seeing profit taking after hitting a 14-year high on Friday. 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 Friday’s high of 4,166.00 and then at 4,175.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,125.00 and then at 4,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices are modestly lower in early U.S. trading on profit taking after hitting a record high on Friday. Buy stops likely reside just above technical resistance at the record high of 17,320 and then at 17,350. Sell stops likely reside just below technical support at 17,260 and then at 17,200. 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 to bullish early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are slightly higher early today, on short covering. Bulls are fading amid the better risk appetite in the market place that is bearish for safe-haven Treasuries. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 141 20/32 and then at 142 even. Buy stops likely reside just above those levels. Shorter-term support lies at 141 even and then at last week’s low of 140 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 near steady in early trading. Bulls are fading. 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 neutral early today. Shorter-term resistance lies at the overnight high of 126.20.0 and then at 126.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 126.06.0 and then at 126.00.0. 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 solidly higher in early trading and hit a four-year high overnight. Bulls have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 87.540 and then at 87.750. Shorter-term support is seen at the overnight low of 87.125 and then at 87.000. Wyckoff’s Intra Day Market Rating: 7.0

NYMEX CRUDE OIL

December Nymex crude oil prices are slightly firmer early today. Bears remain in firm overall near-term technical control. Look for buy stops to reside just above technical resistance at Friday’s high of $81.27 and then at $82.00. Look for sell stops just below technical support at the overnight low of $80.00 and then at last week’s low of $79.44. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Grain futures markets were weaker in overnight trading on corrective pullbacks from recent gains and amid the bearish outside market force of the strong U.S. dollar. Good harvest progress in the U.S. Corn Belt the past few days is also a negative for corn and soybeans. The grain market bulls do still have some upside technical momentum on their side.