Monday, July 27–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. The U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. shares are boosted in part on weekend news that a $1 trillion U.S. government economic stimulus plan is moving through the legislative process more quickly than expected.
The feature in the marketplace to start the trading week is gold prices surging to a record high of $1,941.90, basis nearby Comex futures (as of this writing), and silver futures hitting a seven-year high of $24.82. A continued surge in Covid-19 infections in major industrialized countries, a new U.S. government stimulus package totaling $1 trillion, a slumping U.S. dollar index that hit a nearly two-year low overnight, rising U.S.-China trade tensions, and a big surge in buying of gold-back exchange traded funds, including the Robinhood platform, are propelling the safe-haven metals sharply higher. Said one broker in a morning email dispatch: “Investors see holding gold as offering less risk than other instruments while enjoying upside momentum.”
The Federal Reserve’s Open Market Committee (FOMC) will meet Tuesday and Wednesday to discuss U.S. monetary policy. No changes in policy are expected but the Fed is expected to reiterate U.S. interest rates will remain low for a long time amid the challenges of dealing with the pandemic.
The important outside markets today see Nymex crude oil prices firmer and trading around $41.50 a barrel. The U.S. dollar index is solidly down and hit a nearly two-year low overnight. The yield on the benchmark U.S. Treasury 10-year note is currently dipping a bit and trading around the 0.58% level.
U.S. economic data due for release Monday includes durable goods orders and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a four-month-old price uptrend in place. 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 3,250.00 and then at last week’s high of 3,284.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at last week’s low of 3,191.50. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are solidly higher in early U.S. trading. Bulls remain in firm overall technical control. 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 seen at the 10,600.00 and then at 10,700.00. On the downside, shorter-term support is seen at the overnight low of 10,401.00 and then at last week’s low of 10,301. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading and trading close to last week’s 4.5-month high overnight. Bulls have the solid chart advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 181 30/32 and then at 182 16/32. Shorter-term support lies at the overnight low of 180 31/32 and then at 180 16/32. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading and close to last week’s 4.5-month high. Bulls have the solid 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at last week’s high of 139.25.0 and then at 140.00.0. Shorter-term technical support lies at the overnight low of 139.17.0 and then at last week’s low of 139.10.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are solidly higher and hit a nearly two-year high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.1750 and then at 1.1800. Shorter-term support is seen at 1.1700 and then at today’s low of 1.1655. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly firmer in early U.S. trading. A gentle price uptrend on the daily chart has stalled out again. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at last week’s high of $42.51 and then at $43.00. Look for sell stops just below technical support at $41.00 and then at $40.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The big surge in precious metals markets is inviting some speculator buying interest in the grains. However, good U.S. growing conditions in the U.S. Midwest and deteriorating U.S.-China trade relations are bearish. Soybean futures are maintaining a near-term price uptrend. Same goes for wheat. My bias is that if corn continues to languish, the upside will be limited for soybeans and wheat. Here’s a wild card: It could be that some countries could start stockpiling historically cheap grains in the coming weeks. That could put, or maybe has put, market bottoms in place for the grains, and could even see price uptrends developing.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff