Thursday, Oct. 25–Jim Wyckoff’s Morning Web Log
Note: I am out of the office today. My friend and fellow analyst/trader Ken Seehusen is producing my morning report. Ken’s style is a bit different than mine, but I think you’ll also benefit from Ken’s work.–Jim
The STOCK INDEXES
The December NASDAQ 100 was higher due to short covering overnight as it rebounds off the 50% retracement level of the June-September rally crossing at 2657.00. Stochastics and the RSI are diverging but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If
December extends the decline off September’s high, the 62% retracement level of the June-September rally crossing at 2606.66 is the next downside target. Closes above the 20-day moving average crossing at 2739.82 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 2703.97. Second resistance is the 20-day moving average crossing at 2739.82. First support is the 50% retracement level of the June-September rally crossing at 2757.37. Second support is the 62% retracement level of the June-September rally crossing at 2606.66.
The December S&P 500 index was higher due to short covering overnight as it consolidates some of the decline off last Thursday’s high. The overnight rebound was fueled by expectations that companies report earnings may show a rebound in durable-goods orders and a fall in jobless claims. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near-term. If December extends this month’s decline, the 38% retracement level of the June-July rally crossing at 1385.79 is the next downside target. Closes above the 20-day moving average crossing at 1435.07 would temper the near-term bearish outlook. First resistance is the 20-day moving average crossing at 1435.07. Second resistance is last Thursday’s high crossing at 1459.50. First support is Wednesday’s low crossing at 1401.70. Second support is the 38% retracement level of the June-September rally crossing at 1385.79.
December T-bonds were lower overnight signaling that the short covering rebound off last week’s low might have come to an end. At the same time stochastics and the RSI are turning bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 148-09 are needed to confirm that a short-term low has been posted. If December renews this month’s decline, August’s low crossing at 145-23 is the next downside target. First resistance is the 20-day moving average crossing at 148-09. Second resistance is the reaction high crossing at 150-09. First support is last Thursday’s low crossing at 146-05. Second support is August’s low crossing at 145-23.
ENERGY MARKETS
December crude oil was higher due to short covering overnight as it consolidates some of the decline off last Friday’s high. The overnight rebound in crude oil was supported by speculation that this week’s losses were excessive ahead of reports, which may show an improvement in the U.S. economy. This week’s decline was the largest since May. However, stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. If December extends the decline off September’s high, the 75% retracement level of the June-September rally crossing at 84.64 is the next downside target. Closes above the 20-day moving average crossing at 90.76 would confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 90.76. Second resistance is the reaction high crossing at 94.02. First support is Wednesday’s low crossing at 84.94. Second support is the 75% retracement level of the June-September rally crossing at 84.64.
CURRENCIES
The December Dollar was lower overnight as it extends the trading range of the past five weeks. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. If December extends this week’s rally, this month’s high crossing at 80.31 is the next upside target. Closes below last week’s low would open the door for a possible test of September’s low crossing at 78.72 later this fall. First resistance is this month’s high crossing at 80.31. Second resistance is the 38% retracement level of the July-September decline crossing at 80.97. First support is last Wednesday’s low crossing at 78.97. Second support is September’s low crossing at 78.72.
GRAINS
This morning at 7:30 CT is the weekly export sales. The Dow Jones range of analysts’ estimates for soybean export sales is (22.046-33.069 million bushels); corn export sales (5.905 14.763 million bushels); wheat export sales (9.186-16.535 million bushels); soybean meal 150-250 tmt and soybean
oil 15-25 tmt.
December corn was higher overnight as it extends this month’s trading range. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If December renews the rally off September’s low, the reaction high crossing at 7.89 1/2 is the next upside target. Closes below the reaction low crossing at 7.32 1/4 would confirm that a short-term top has been posted thereby opening the door for additional weakness near-term. First resistance is the reaction high crossing at 7.89 1/2. Second resistance is the reaction high crossing at 8.06 1/2. First support is the reaction low crossing at 7.32 1/4. Second support is the late-September low crossing at 7.05.
December wheat was fractionally lower overnight as it consolidated some of Wednesday’s rally. The high-range close sets the stage for a steady to higher opening when the day session begins trading. If December extends the rally off last week’s low, minor resistance crossing at 8.94 then 9.07 are the next upside targets. From a broad perspective, December wheat needs to close above 9.53 1/4 or below 8.36 1/2 to confirm a breakout of the summer’s trading range and point the direction of the next trending move. First resistance is the reaction high crossing at 8.94. Second resistance is the reaction high crossing at 9.07. First support is the reaction low crossing at 8.40 1/4. Second support is the 38% retracement level of this summer’s rally crossing at 8.29 1/2.
January soybeans were fractionally lower overnight as it consolidates some of the rally off last week’s low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If January extends the aforementioned rebound, the 38% retracement level of the September-October decline crossing at 15.97 3/4 is the next upside target. Closes below the 10-day moving average crossing at 15.34 1/2 would temper the near-term friendly outlook in the market. First resistance is the 38% retracement level of the September-October decline crossing at 15.97 3/4. Second resistance is the 50% retracement level of the September-October decline crossing at 16.33. First support is the 10-day moving average crossing at 15.34 1/2. Second support is last Monday’s low crossing at 14.84.
