Tuesday, September 6–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. It was a busy weekend of news for the marketplace, as U.S. market participants return from a three-day holiday weekend.
The U.S. dollar index hit a fresh 20-year high Monday as the Euro currency slumped after Russia said it won’t reopen its main natural gas pipeline from Russia into Europe.
Liz Truss became the new Prime Minister of the U.K.
OPEC-plus decided to cut its collective crude oil production by 100,000 barrels per day starting in October, in an effort to boost prices.
The Reserve Bank of Australia Tuesday raised its main interest rate by 50 basis points to 2.35%, its highest since early 2015. The Bank of Canada rate decision will be Wednesday and the European Central Bank meets Thursday. Many expect the ECB to raise its main interest rate by 75 basis points.
And then there’s the strict Covid lockdowns in China that have weakened the world’s second-largest economy. China’s central bank on Monday said it would ease monetary policy further by lowering the reserve requirement ratio for banks’ foreign exchange reserves.
In a compelling news story from the Wall Street Journal, the publication reported today that “investors around the world are piling into U.S. stocks, even as they brace for the prospect of a rocky autumn, because they say there’s nowhere better to shelter from the turbulence in global markets.” Said one market analyst in the story: “The U.S. looks the least challenged in a very challenging world.” If that story is accurate, what were considered “risk assets” (stocks) now being sought as a safe-haven asset globally could be significantly bearish for the gold, silver and U.S. Treasury markets, which have been considered safe-haven assets for a very long time.
The key outside markets today see Nymex crude oil prices weaker and trading around $86.50 a barrel. The U.S. dollar index is higher in early U.S. trading. The yield on the 10-year U.S. Treasury note is fetching 3.242%.
U.S. economic data due for release Tuesday includes the U.S. services PMI, the ISM report on business services, the global services PMI and the employment trends index report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in 4,000.00 and then at 4,035.00. Support for active traders is seen at last week’s low of 3,920.00 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at last Friday’s high of 12,534.25 and then at 12,750.00. On the downside, shorter-term support is seen at last week’s low of 12,091.00 and then at 12,000.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are down in early U.S. trading. Prices are in a five-week-old downtrend on the daily bar chart and bears have the advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 134 30/32 and then at 136 even. Shorter-term support lies at last week’s low of 133 4/32 and the at 132 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading. Prices are in a five-week-old downtrend on the daily bar chart and bears have the technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 116.16.0 and then at the overnight high of 116.27.5. Shorter-term technical support lies at last week’s low of 115.23.0 and then at 115.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.0150 and then at 1.0200. Shorter-term support is seen at the overnight contract low of .9947 and then at .9900. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $88.00 and then at $90.00. Look for sell stops just below technical support at the August low of $85.37 and then at $84.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures were mixed to weaker overnight. Recently dropping crude oil and other raw commodity prices and keener risk aversion have been bearish for the grain markets. Seasonal factors are also bearish for corn and soybeans as the U.S. harvest approaches and there are no major weather threats. Look for grain traders to take more daily price direction from daily price movements in the crude oil market.
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