Jim's Morning Markets Report--October 18

October 18, 2013 02:37 AM
 

* LATEST MARKET DEVELOPMENTS *

 

Now that the U.S. government is reopened and U.S. lawmakers have put off for a few months the budget and debt ceiling debacle that had captured the market place's attention for two weeks, traders are looking at the implications of the matter, including the likelihood the whole mess will again be played out in the first quarter of 2014. The gold and U.S. Treasury markets are seeing safe-haven demand in the wake of this week's events in Washington, D.C. Also, most of the market place has concluded the U.S. Federal Reserve will have to hold off on any changes in its monetary policy until it can get a good read on the U.S. economy's health. With U.S. economic data being postponed for nearly three weeks it appears likely that the Fed won't have a good gauge on the U.S. economy's health until at least the middle of the first quarter of 2014. This scenario is a bullish underlying factor for the U.S. stock indexes and raw commodity markets, as any "tapering" of the Fed's quantitative easing has been put on hold. In overnight news, China's gross domestic product grew at a 7.8% annual rate in the third quarter, which was in line with market expectations and up from the growth rates seen in the world's second-largest economy in the first and second quarters of this year. This news is a bullish underlying factor for the raw commodity sector.

Asian and European stocks were lifted on the China news and on the late rally on Wall Street Thursday. The U.S. dollar index is lower again Friday morning and hit a 10.5-month low overnight. Currency traders have realized the U.S.

budget/debt deal reached Wednesday is just a temporary band- aide placed on a festering wound. The European Union and its financial problems have been on the back burner of the market place for a while now, mainly because of the U.S.

debt/budget fiasco. However, the EU's problems have not disappeared. It was reported overnight that non-performing bank loans in Spain rose to a new high of 12% in August.

There is no major U.S. economic data due for release Friday, due to the recent U.S. government shutdown. Government agencies are scrambling to get reports put together now that the government is reopened. Traders and investors will soon get a steady flow of government economic reports.--Jim

               

U.S. STOCK INDEXES

 

S&P 500 futures: Prices are firmer in early U.S. trading and hit another new all-time high overnight. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today.

The 4-day moving average is above the 9- 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 overnight high of 1,733.10 and then at 1,750.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,705.00 and then at 1,691.90. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

 

Nasdaq index futures: Prices are firmer early today and hit another 13-year high overnight. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today.

Shorter-term technical resistance is located at the overnight high of 3,320.00 and then at 3,335.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,300.00 and then at 3,275.00.

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 and hit a three-week high overnight. Buy stops likely reside just above technical resistance at 15,350 and then at 15,400.

Sell stops likely reside just below technical support at Thursday's low of 15,165 and then at 15,100. Shorter-term moving averages are neutral 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: 5.5

 

U.S. TREASURY BONDS AND NOTES

 

December U.S. T-Bonds: Prices are higher early today and hit a fresh 3.5-month high on short covering and safe-haven buying. Bulls have gained good upside momentum this week.

Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-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 134 26/32 and then at 135 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 134 even and then at the overnight low of 133 28/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market

Rating: 6.0

 

December U.S. T-Notes: Prices are higher early today and hit a fresh four-month high overnight. Bulls have gained good upside momentum this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow

stochastics) are neutral to bullish early today. Shorter- term resistance lies at the overnight high of 127.11.5 and then at 127.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 127.00.0 and then at the overnight low of 126.26.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market

Rating: 6.0

 

U.S. DOLLAR INDEX

 

The December U.S. dollar index is weaker early today and hit a fresh 10.5-month low overnight. Bears remain in firm overall near-term technical control. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 79.820 and then at 80.000. Shorter-term support is seen at the overnight low of 79.550 and then at 79.250.

Wyckoff's Intra Day Market Rating: 4.5

 

NYMEX CRUDE OIL

 

November Nymex crude oil prices are firmer early today on short covering. Bears still have the overall near-term technical advantage. Prices are in a seven-week-old downtrend on the daily bar chart. In November Nymex crude, look for buy stops to reside just above resistance at

$102.00 and then at $102.50. Look for sell stops just below technical support at $101.00 and then at the overnight low of $100.52. Wyckoff's Intra-Day Market Rating: 4.5

 

GRAINS

 

Markets were higher overnight on more short covering and on a lower U.S. dollar index. Corn and soybean harvesting is progressing in the U.S. Corn Belt this week, which is limiting the upside due to bearish seasonals. Traders are starting to get some fresh fundamental news from USDA as the U.S. government has reopened. Technically, the corn bears are in command, soybean bears have the slight chart advantage, and wheat bulls possess the slight near-term technical advantage.

 

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