Thursday, June 20–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly higher overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins.
Traders and investors are still digesting Wednesday’s conclusion of the Federal Open Market Committee (FOMC) meeting that saw no change in U.S. interest rates, but the Fed did lean significantly more dovish. The FOMC statement said the committee would lower interest rates in the coming months if U.S. economic growth begins to slow down. The FOMC expects the U.S. economic expansion to continue but “uncertainties about this outlook have increased,” the statement said. About half of the FOMC members now expect the Fed to make at least one interest rate reduction this year. The FOMC statement also eliminated the word “patient” from its monetary policy stance.
Markets are continuing to react to the dovish Fed meeting and also to European Central Bank President Mario Draghi’s easy stance on monetary policy in comments he made earlier this week. The U.S. dollar index has sold off, the Euro currency has rallied, gold has soared to a five-year high, crude oil prices have surged and U.S. stock indexes have pushed higher and within easy striking distance of their record highs.
The Bank of England and Bank of Japan also hold their regular monetary policy meetings yet this week.
Gold is also seeing safe-haven demand today on reports Iran’s military shot down a U.S. military drone in Iranian territory. Also, a missile struck a Saudi Arabian water plant, and Iran is being blamed. The U.S.-Iran stare-down just got ratcheted up another notch. President Trump is now likely closer than ever to unleashing some degree of a military operation against Iran. It’s a good bet this situation will get worse before it gets better.
The key “outside markets” today see Nymex crude oil prices solidly higher and trading just above $55.00 a barrel. Meantime, the U.S. dollar index is lower on good follow-through selling from solid losses posted Wednesday afternoon in the wake of the dovish FOMC statement.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators and international transactions (current account).
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher in early U.S. trading and very close to this year’s high. Bulls have the solid overall near-term technical advantage to suggest still more upside, including new highs. 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the contract high of 2,967.75 and then at 2,985.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,930.50 and then at Wednesday’s low of 2,915.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.0
September Nasdaq index futures: Prices are higher in early U.S. trading and just below this year’s high. Bulls have the solid overall near-term technical advantage to suggest still more upside. 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 the overnight high of 7,802.25 and then at 7,850.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,750.00 and then at the overnight low of 7,692.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are firmer and hit a new contract high overnight. Bulls have the solid overall near-term technical advantage to suggest more upside. 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 bullish early today. Shorter-term technical resistance is seen at 156 even and then at the overnight contract high of 156 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 7/32 and then at 155 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher and hit a contract high in early U.S. trading. Bulls have the solid overall 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 neutral to bullish early today. Shorter-term support lies at the overnight low of 127.26.0 and then at 127.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight contract high of 128.08.0 and then at 128.12.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The September U.S. dollar index is solidly lower in early U.S. trading. Bulls are fading fast. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 96.500 and then at the overnight high of 96.705. Shorter-term support is seen at the overnight low of 96.155 and then at 96.000. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
July Nymex crude oil prices are solidly higher and hit a three-week high overnight. A price downtrend on the daily chart has now been soundly negated. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $55.63 and then at $56.00. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures prices were lower again overnight, with corn down around 1 cent, soybeans off around 4 cents and wheat about 4 cents. More profit taking from recent gains from the shorter-term futures traders is featured, was well as downside corrections, following recent solid gains. So far no serious chart damage has been inflicted and near-term price uptrends are still in place. Traders will closely examine today’s weekly USDA export sales report for the grains. Midwest U.S. weather still leans bullish for the grains. Rainy conditions are forecast for much of the U.S. Midwest for the rest of this week. Focus is turning to the June 28 USDA U.S. planted acreage report. That report will be one of the most important grain market reports of the year. Grain analysts are saying it’s wide open on the numbers the Agriculture Department assigns to corn and soybean planted acres. This makes the report a big unknown and likely to really gyrate the grain futures markets in the immediate aftermath of its release. Corn and soybean prices could either trade sharply higher or sharply lower on the acreage numbers. Importantly, the raw commodity sector, including the grains, got a fundamental boost by the Federal Reserve and the European Central Bank moving toward more accommodative monetary policies this week. The U.S. dollar has depreciated, making U.S. grains more competitive on world markets, and will provide more liquidity in the financial system, which will make commodities more attractive for investors. Already, gold and crude oil prices are in strong rally modes following this week’s central bank news.
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