Friday, November 8–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Traders and investors are awaiting Friday morning’s U.S.
employment report for October. The non-farm payrolls number
of that report is expected to have grown by around 120,000.
The jobs report will be a gauge in helping the market place
figure out when the Federal Reserve will start to wind down
its quantitative easing of monetary policy. Look for active
trading in the aftermath of the report. A surprising non-
farm payroll figure could prompt high volatility in many
markets.

The Standard & Poors credit agency on Friday unexpectedly
downgraded France’s credit rating by one notch, to AA. The
agency said France’s inability to curtail government
spending prompted the move. European stock markets were
pressured on the news, but the Euro currency showed little
reaction. However, if other European Union countries’
sovereign debt ratings start getting fresh downgrades, the
EU sovereign debt crisis would be back on the front burner
of the market place.

Asian markets were weaker Friday on renewed concerns
regarding the U.S. Federal Reserve possibly starting to
“taper” its monthly bond-buying program (also called
quantitative easing) sooner than many expect. A much
stronger than expected third-quarter U.S. GDP reading
Thursday prompted those fresh worries.

China’s Communist party meets this weekend, during which
time major plans and economic reforms are unveiled by the
leaders of the country. The world market place will be
closely watching for any proclamations coming from that
confab.

Other U.S. economic data scheduled for release Friday
includes personal income and outlays and the University of
Michigan consumer sentiment survey.

Friday’s Wyckoff’s Daily Risk Rating: 7.0 (U.S. jobs data is
out Friday, which is likely to at least temporarily gyrate
the markets.)

(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). Each morning I will
look at several markets and scan the world’s news headlines
to get a sense of how risk appetite in the market place will
shape for the trading day. For example, extreme readings in
my Daily Risk Rating would be a very bullish U.S. jobs
report that would fully cheer investors—Wyckoff’s Daily Risk
Rating would be 1. Conversely, a daily rating of 10 would be
an unexpected military confrontation in the Middle East that
included combat. Most days Wyckoff’s Daily Risk Rating will
be around neutral–between 4 and 6.)

–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 below the
9-day. The 9-day is above 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 Thursday’s record high of 1,774.20
and then at 1,785.00. Buy stops likely reside just above
those levels. Downside support for active traders today is
located at this week’s low of 1,742.50 and then at 1,725.00.
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
shorter-term moving averages (4- 9-and 18-day) are neutral
early today. The 4-day moving average is below 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 3,350.00 and
then at 3,375.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at this
week’s low of 3,314.25 and then at 3,300.00. Sell stops are
likely located just below those levels. Wyckoff’s Intra-Day
Market Rating: 5.5.

Dow futures: Prices are slightly higher early today. Buy
stops likely reside just above technical resistance at
15,600 and then at 15,660. Sell stops likely reside just
below technical support at 15,545 and then at 15,500.
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 above the 18-day moving average.
Shorter-term oscillators (RSI, slow stochastics) are neutral
to bearish early today. Wyckoff’s Intra-Day Market Rating:
5.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are slightly higher early
today. 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 bullish
early today. Shorter-term resistance lies at the overnight
high of 133 31/32 and then at this week’s high of 134 6/32.
Buy stops likely reside just above those levels. Shorter-
term technical support lies at the overnight low of 133
21/32 and then at 133 even. Sell stops likely reside just
below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
 
December U.S. T-Notes: Prices are slightly higher early
today. 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 this week’s high of
127.13.5 and then at 127.20.0. Buy stops likely reside just
above those levels. Shorter-term technical support lies at
127.00.0 and then at 126.27.5. Sell stops likely reside
just below those levels. Wyckoff’s Intra-Day Market Rating:
5.5

U.S. DOLLAR INDEX

The December U.S. dollar index is slightly higher early
today, on more short covering. Bulls have gained some more
upside momentum this week. Slow stochastics for the dollar
index are bearish early today. The dollar index finds
shorter-term technical resistance at 81.025 and then at
81.205. Shorter-term support is seen at this week’s low of
80.455 and then at 80.320. Wyckoff’s Intra Day Market
Rating: 5.5

NYMEX CRUDE OIL

December Nymex crude oil prices are near steady early today.
Bears still have the overall near-term technical advantage.
Prices are in a 10-week-old downtrend on the daily bar
chart. In December Nymex crude, look for buy stops to reside
just above resistance at the overnight high of $94.66 and
then at this week’s high of $95.40. Look for sell stops just
below technical support at the overnight low of $93.90 and
then at this week’s low of $93.07. Wyckoff’s Intra-Day
Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. Look for more active
trading Friday, in the aftermath of USDA’s latest monthly
supply and demand report due out just before midday. That
report is not expected to be bullish and is likely to show
record U.S. corn and soybean production. Technically, the
corn bears are in firm command, while soybeans are slightly
bearish on a near-term basis and wheat bears have the near-
term technical advantage. It would not surprise me to see
the following scenario play out in the grains into the end
of the year: Corn continues to lead soybeans and wheat
steady to lower for a few more weeks, but then corn prices
bottom out and that market puts in a major low. Wheat
prices will also bottom out, to form a big and bullish
double-bottom reversal pattern on the daily chart. Soybean
prices could grind sideways to lower into the end of the
year.