* Latest Market Developments *
OVERNIGHT DEVELOPMENTS
There continues to be major risk aversion in the world market place Thursday. Stock markets are selling off further and the U.S. Treasury market has seen bond and note yields plunge amid safe-haven moves by investors. Key questions now are: when will the rout in the stock markets end, and will the present fear in the market place turn into an outright panic. Today is an extra important trading day in the market place, possibly the most important trading day of 2014. Veteran market watchers are looking for that stock market “capitulation” that would signal the present blood-letting is ending.
European stocks plunged Thursday, following the lead of Wall Street Wednesday but also amid renewed worries about the periphery European Union nations that are once again showing financial strains. Bond yields in Spain, Italy and Greece are on the rise again—although not even close to the high yield rates posted at the height of the EU sovereign debt crisis a couple years ago. One analyst called the EU’s present economic woes “a deflationary spiral.” Indeed, fresh economic data from the EU Thursday showed the bloc’s members that use the Euro currency saw its annual consumer inflation rate fall to a five-year low, at up just 0.3% in September.
The two key “outside markets” see the U.S. dollar index firmer Thursday, following the big sell off Wednesday. There will likely continue to be safe-haven demand for the greenback if this market anxiety continues. Meantime, Nymex crude oil prices are hovering just above what is major psychological support at the $80.00-per-barrel level. Traders in all markets should continue to closely monitor these two important outside markets.
U.S. economic data due for release Thursday includes the weekly jobless claims report, Treasury international capital data, industrial production and capacity utilization, the weekly DOE liquid energy stocks report, and the NAHB housing market index, and the Philadelphia Fed business survey. Several Federal Reserve officials also speak today.
Wyckoff’s Daily Risk Rating: 8.5 (This is my highest Daily Risk Rating since its inception. The market place is very anxious and there is keen risk aversion. Traders and investors are focused on several worries: Ebola, the prospect of weakening world economies, the world stock market sell-off, plunging crude oil prices, and the other geopolitical hotspots that have been in the news in recent months.)
(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 sharply lower in early trading and hovering near this week’s six-month low. Bears have bigtime downside momentum. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at 1,840.00 and then at the overnight high of 1,857.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,813.00 and then at 1,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 3.0
Nasdaq index futures: Prices are sharply lower in early trading and hit a fresh 4.5-month low overnight. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 3,700.00 and then at 3,725.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,675.00 and then at 3,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
Dow futures: Prices are sharply lower in early U.S. trading and hovering near this week’s six-month low. Buy stops likely reside just above technical resistance at 15,850 and then at 15,900. Sell stops likely reside just below technical support at Wednesday’s low of 15,770 and then at 15,700. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff’s Intra-Day Market Rating: 3.0
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are sharply higher early today on safe-haven demand. Bulls have the strong overall near-term technical advantage. 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 bullish early today. Shorter-term resistance lies at the overnight high of 146 7/32 and then at 147 even. Buy stops likely reside just above those levels. Shorter-term technical support is seen at 145 even and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 8.0 December U.S. T-Notes: Prices are sharply higher in early trading. Bulls have the strong overall near-term technical advantage, amid ongoing safe-haven demand this week. 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 bullish early today. Shorter-term resistance lies at the overnight high of 129.18.0 and then at 130.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 129.00.0 and then at 128.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 8.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher in early trading. Bulls still have the firm overall near-term technical advantage but have faded a bit. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 85.530 and then at 85.750. Shorter-term support is seen at 85.000 and then at the overnight low of 84.865. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
November Nymex crude oil prices are solidly lower early today and hit another more-than-two-year low overnight. Prices also dropped below $80.00 a barrel. Bears are in strong overall near-term technical control. Look for buy stops to reside just above technical resistance at $81.00 and then at $82.00. Look for sell stops just below technical support at the overnight low of $79.78 and then at $79.00. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
Markets were narrowly mixed in overnight trading. The risk aversion in the market place recently has been a bearish drag on the grain futures markets. Still, recent technical developments begin to suggest that market bottoms are in place, which can also be called “harvest lows.” However, grain market bears remain in overall near-term technical control. Focus today will be on action in the outside markets.
