Daily Morning Report

Wednesday, July 24–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session beings.

European shares were pressured by a weak economic report. The Euro zone purchasing managers index (PMI) composite reading came in at 51.5 in July versus expectations for a figure of 52.1. The manufacturing PMI was worse, coming in at 46.4 in July versus expectations for a number of 47.6. Any reading below 50.0 suggests contraction in the sector.
German government bond yields dropped to a record low following the weak report. The German manufacturing PMI came in at 43.1 in July. Germany’s economy is the workhorse of the Euro zone.

U.S. trader and investor attitudes are still generally upbeat at mid-week on news the U.S. and China have restarted their heretofore stalled trade talks, with U.S. officials traveling to China soon for fresh negotiations.

The European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The mainstream business media is starting to pick up on the recent rallies in gold and silver markets. The Wall Street Journal ran a feature story entitled, “Gold’s Luster is Spreading to Other Precious Metals.” At first blush a metals trader could view this as bullish, as it gives the metals more exposure to potential traders/investors. That may well be true. However, long-time market watchers remember the old trading adage that says when the general public starts to pick up on a market’s significant price move, that move is then probably near an end.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $57.00 a barrel. Meantime, the U.S. dollar index is near steady after hitting a five-week high Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. flash manufacturing PMI, the services PMI, new residential sales and the weekly DOE liquid energy stocks report.

–Jim

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Tuesday, July 23–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings. This is a big week for U.S. corporate earnings reports.

Traders and investors are in upbeat moods on Tuesday. Reports say President Trump met with U.S. technology companies Monday at the White House, regarding easing U.S. sanctions on China’s big communications firm, Huawei. This is being deemed a big positive on the U.S.-China trade front, suggesting the U.S. wants to move the negotiations forward.

Also, the U.S. Congress and the Trump administration have agreed on a government spending deal, to avoid a government shutdown anytime soon.

The marketplace is not seeing much lingering reaction to weekend news Iran’s military seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Still, Iran’s confrontation with the U.S. and the U.K. sees a high probability of escalating in the coming weeks.

Just over the horizon: the European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The key “outside markets” today see Nymex crude oil prices higher and trading around $56.25 a barrel. Meantime, the U.S. dollar index is solidly higher today.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the Richmond Fed business survey, and existing home sales.

–Jim

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The U.S. stock indexes last week hit contract and record highs, as the long bull run in equities rolls on, with no solid chart clues that market tops are close at hand. The path of least resistance for the stock indexes will remain sideways to higher until a significant bearish chart clue occurs. What might those bearish clues be? A couple: two big down days in a row, a bearish weekly low close on a Friday, and the near-term price uptrend being negated, as seen on the daily charts. Stay tuned and keep monitoring my daily reports for any clues on near-term price trend changes in the markets.–Jim

Monday, July 22–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session beings. The U.S. indexes hit record and contract highs last week.

Geopolitical tensions are higher to start the trading week, on news that Iran’s military late Friday seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Iran’s confrontation with the U.S. and the U.K. will probably escalate in the coming weeks, with the concern in the marketplace being a major U.S. military strike against Iran, which could disrupt oil shipping in the Persian Gulf.

Focus of traders and investors remains on the major central banks of the world and their lean toward more accommodative monetary policies amid worries about slowing global economic growth. The European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.

The key “outside markets” today see Nymex crude oil prices higher and trading around $56.50 a barrel. Meantime, the U.S. dollar index is slightly higher today.

U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.

–Jim

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Friday, July 19–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session beings. The U.S. indexes hit record and contract highs earlier this week.

The marketplace is still buzzing about remarks made by influential New York Federal Reserve Bank President John Williams Thursday afternoon. He suggested the Fed should be more aggressive in its monetary policy actions to prevent a slowdown in the U.S. economy. That led some market watchers to believe the Fed could do a 0.5% rate cut at its late-July FOMC meeting. Later, the Federal Reserve tried to “walk back” Williams’ comments. St. Louis Fed President James Bullard on Friday said a 0.25% U.S. rate cut in the near term is appropriate.

Gold prices hit a six-year high overnight on the dovish Federal Reserve notions, the U.S. dollar Thursday afternoon dropped and U.S. Treasury prices rallied in the aftermath of Williams’ remarks.

The key “outside markets” today see Nymex crude oil prices firmer and trading just below $56.00 a barrel. The oil market bulls have faded this week amid talk the U.S. and Iran could start talking, regarding U.S. sanctions on Iran. However, there were also reports the U.S. military and Iran’s military are challenging each other near the Strait of Hormuz, including unconfirmed reports the U.S. shot down an Iranian drone. Meantime, the U.S. dollar index is higher today on a rebound following the sell off Thursday following Williams’ comments.

U.S. economic data due for release Friday is light and includes the University of Michigan consumer sentiment survey.

–Jim

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The Euro currency futures market is one of the most popularly traded markets in the world. See on the daily bar chart that the Euro currency has started another price downtrend and prices are now not that far above the lows for the years. Bears again have the solid overall near-term technical advantage, to suggest a challenge of the yearly lows, or below. Stay tuned!–Jim