Monday, August 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to higher in overnight trading. The U.S. stock indexes are pointed toward mixed to mostly firmer openings when the New York day session begins. The big news in the business world is weekend reports that U.S. President Trump has given the Chinese company TikTok 45 days to sell its U.S operations, as Trump says TikTok is a national security threat to the U.S. Microsoft said Sunday it plans to by TikToc. This move by the U.S. ratcheted up another notch the U.S.-China strains.
China’s Caixin manufacturing purchasing managers index (PMI) was reported Monday and came in at 52.8 in July versus 51.2 in June and a 51.1 reading forecast by analysts. A reading above 50.0 suggests expansion in the sector. The July number was the best since 2011 and suggests the world’s second-largest economy continues to rebound while at the same time the U.S. economy may be suffering a setback from its recovery from the Covid-19 pandemic lockdowns.
China’s central bank on Monday said it will boost its money supply and total social financing in 2020 compared to 2019, including long-term loans to small businesses and manufacturers.
Meantime, the Euro zone manufacturing PMI for July was revised up to 51.8 from 47.4 in June and a 51.1. forecast for July.
The key U.S. data point of the week will be Friday’s jobs report for July from the Labor Department. The non-farm payrolls number is forecast to be up by around 1.25 million after rising by 4.8 million in June. However, don’t be surprised to see a miss from the forecasts, to likely move the markets.
The important outside markets today see Nymex crude oil prices weaker and trading around $39.75 a barrel. The crude oil market bulls have seen their price uptrend on the daily chart stall out and turn into sideways and choppy trading. The U.S. dollar index is higher on a corrective bounce after hitting a nearly two-year low last week.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM report on business and manufacturing, construction spending, domestic auto sales, and the global manufacturing PMI.
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 4.5-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 to bullish early today. Today, shorter-term technical resistance comes in at the July high of 3,284.50 and then at 3,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at last week’s low of 3,195.00 and then at 3,175.00. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading. Bulls remain in firm overall technical control. 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 seen at 11,000.50 and then at the July high of 11,058.50. On the downside, shorter-term support is seen at 10,800.00 and then at 10,700. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are weaker in early U.S. trading on a corrective pullback after hitting a nearly five-month high on Friday. Bulls have the solid near-term 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 182 17/32 and then at last week’s high of 182 25/32. Shorter-term support lies at Friday’s low of 181 21/32 and then at 181 10/32. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly lower in early U.S. trading, on a mild corrective pullback after hitting a contract high last Friday. 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 contract high of 140.06.0 and then at 140.12.0. Shorter-term technical support lies at the overnight low of 139.30.0 and then at 139.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
The September Euro currency futures are lower on profit taking in early U.S. trading, after hitting a nearly two-year high last Friday. Bulls still 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 neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1807 and then at 1.1850. Shorter-term support is seen at 1.1700 and then at 1.1650. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly lower in early U.S. trading. A gentle price uptrend on the daily chart has rolled over into sideways and choppy 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 even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $40.43 and then at $41.00. Look for sell stops just below technical support at the overnight low of $39.58 and then at last week’s low of $38.72. Wyckoff’s Intra-Day Market Rating: 4.5
US grain futures are mixed in early U.S. pre-market trading. Still bearish is non-threatening U.S. weather in the Corn Belt has August is now under way and harvest creeps closer for corn and soybeans. Buying interest in the grains will be limited early this week on worries that China at any time could stop its heretofore hefty purchases of U.S. grains, as strains between the two countries become keener. Traders will closely monitor this morning’s weekly USDA export inspections report.
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.