Jim's Morning Markets Report--Nov. 6

November 6, 2013 12:45 AM
 

Wednesday, November 6--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The European Stoxx 600 index hit another five-year high
overnight on growing notions the European Central Bank will
soon ease its monetary policy by lowering interest rates.
The ECB monthly monetary policy meeting is Thursday. The
Euro currency has dropped significantly in value against the
U.S. dollar just recently, on beliefs the ECB will soon cut
its key interest rate. Still, the majority of analysts and
economists polled believe the ECB won’t make a policy move
on Thursday.

Tuesday’s EU inflation numbers, combined with similar
figures released last week, are worrisome as they suggest
deflationary conditions could be on the horizon for the EU.
The recent EU inflation data bolsters ideas the ECB could
move to ease its monetary policy in an effort to keep the
tepid EU economic recovery moving forward. On Wednesday the
OECD reported inflation in the major world economies in
September declined for the second straight month. Annual
inflation in the OECD’s 34 developed countries fell to 1.5%
from 1.7% in August. These recent inflation numbers fall
favorably into the camp of those market watchers wanting
easy money policies of the world’s major central banks to
continue.

Traders and investors are looking ahead to Friday’s key 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.

China’s Communist party meets this week, 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.

U.S. economic data due for release Wednesday includes the
weekly MBA mortgage applications survey, the Challenger job
cuts report, leading economic indicators, the global
services PMI, the weekly DOE energy stocks report, and the
U.S. Treasury announces its quarterly refunding package.

(Wyckoff’s Daily Risk Rating is now your way to quickly
gauge investor risk appetite in the world market place each
day. Each day I will 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.)

Wednesday’s Wyckoff’s Daily Risk Rating: 4.0 (No major
developments overnight, or expected on Wednesday. However,
ECB meeting Thursday and U.S. jobs data Friday will move the
scale to more risk aversion, just ahead of the data’s
release.)

--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
bullish early today. The 4-day moving average is above the
9-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 1,773.10 and then at 1,785.00. Buy stops
likely reside just above those levels. Downside support for
active traders today is located at the overnight low of
1,756.30 and then at last week’s low of 1,747.50. Sell stops
are likely located just below those levels. Wyckoff's Intra-
day Market Rating: 6.0

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 last week’s
high of 3,401.75 and then at 3,415.00. Buy stops likely
reside just above those levels. On the downside, short-term
support is seen at the overnight low of 3,377.75 and then at
this week’s low of 3,355.75. Sell stops are likely located
just below those levels. Wyckoff's Intra-Day Market Rating:
6.0.

Dow futures: Prices are higher early today. Buy stops likely
reside just above technical resistance at the record high of
15,660 and then at 15,700. Sell stops likely reside just
below technical support at 15,550 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
early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are weaker early today. Bulls
are fading. Shorter-term moving averages (4- 9- 18-day) are
neutral early today. The 4-day moving average is below the
9-day and 18-day. The 9-day is above the 18-day moving
average. Oscillators (RSI, slow stochastics) are bearish
early today. Shorter-term resistance lies at the overnight
high of 133 5/32 even and then at 133 16/32. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at 132 16/32 and then at 132 even.
Sell stops likely reside just below those levels. Wyckoff's
Intra-Day Market Rating: 4.5
 
December U.S. T-Notes: Prices are near steady early today.
Shorter-term moving averages (4- 9- 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. Oscillators
(RSI, slow stochastics) are neutral to bearish early today.
Shorter-term resistance lies at the overnight high of
126.25.5 and then at 127.00.0. Buy stops likely reside just
above those levels. Shorter-term technical support lies at
this week’s low of 126.12.5 and then at 126.08.0. 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 lower early today. Slow
stochastics for the dollar index are bearish early today.
The dollar index finds shorter-term technical resistance at
the overnight high of 80.800 and then at this week’s high of
81.025. Shorter-term support is seen at 80.500 and then at
80.320. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

December Nymex crude oil prices are firmer early today on
short covering after hitting a more-than-four-month low on
Tuesday. Bears have the overall near-term technical
advantage. Prices are in a nine-week-old downtrend on the
daily bar chart. In December Nymex crude, look for buy stops
to reside just above resistance at $95.00 and then at
$95.50. Look for sell stops just below technical support at
the overnight low of $93.65 and then at $93.00. Wyckoff's
Intra-Day Market Rating: 5.5

GRAINS

Markets were slightly higher overnight. U.S. corn and
soybean harvest is well over half-completed and the bearish
cash grain movement and hedge selling should be fading
soon. Traders are looking ahead to Friday’s latest monthly
supply and demand report. 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.
 

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