Thursday, July 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly up in overnight trading. China’s stock market continues on a roll as its main index, the Shanghai composite, rose for the eighth session in a row and is up 15% since the beginning of July. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Trader and investor appetite has pulled back a bit late this week, on notions the U.S. and global economies may be stalling out from their rapid initial recoveries from the Covid-19-induced damage. Several Federal Reserve officials this week issued warnings that U.S. economic growth could be running out of steam amid the resurgence of Covid infections that has caused some states to shut down businesses again.
China’s currency, the yuan, has this week surged to its highest level against the U.S. dollar since March, as China’s economic recovery and growth is apparently outpacing that of the U.S. economy. It’s no secret that the Chinese government wants to unseat the U.S. dollar as the world’s reserve currency.
Safe-haven gold is benefitting from the keener worries in the marketplace as prices this week have hit a nine-year high and are closing in on the all-time high of $1,920 an ounce scored in 2011.
Said one stock market analyst in a morning email dispatch: “Fundamentals and valuations appear to be of limited influence on investors’ decision making. The fear of missing out, monetary and fiscal policy actions, low yields, lower interest rates for longer, are some of the factors that have led to this structural change in markets. If the Fed can keep zombie companies alive by keeping the lending taps open, why wouldn’t investors profit from these actions? However, the Fed cannot keep running these measures forever, and for many corporates relying on debt to stay afloat, sooner or later they will fail if they can’t return to profitability.”
The U.S. Congressional Budget Office on Wednesday reported the U.S. government spending in June was triple that of the same period last year.
The important outside markets today see Nymex crude oil prices slightly lower and trading around $40.75 a barrel. The U.S. dollar index is slightly higher early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.65% level.
U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly retail chain store sales, and monthly wholesale trade.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly down in early U.S. trading. Bulls still have the firm overall near-term technical advantage. 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 this week’s high of 3,184.00 and then at 3,200.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,105.75 and then at 3,062.75. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are firmer in early U.S. trading and hit another record high overnight. Bulls remain in solid 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. 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 record high of 10,714.25 and then at 10,800.00. On the downside, shorter-term support is seen at 10,600 and then at 10,500.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 this week’s high of 179 12/32 and then at the June high of 179 17/32. Shorter-term support lies at the overnight low of 178 19/32 and then at 178 even. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls have the solid near-term technical advantage as prices trade sideways at higher levels. 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 resistance lies at this week’s high of 139.10.5 and then at last week’s high of 139.14.0. Shorter-term technical support lies at 139.00.0 and then at last week’s low of 138.23.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The September Euro currency futures are weaker in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has been choppy. 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 early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1386 and then at 1.1400. Shorter-term support is seen at 1.1300 and then at this week’s low of 1.1236. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly weaker in early U.S. trading. A gentle price uptrend is in place on the daily chart. 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 this week’s high of $41.08 and then at the June high of $41.63. Look for sell stops just below technical support at this week’s low of $39.84 and then at $39.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are higher in early U.S. pre-market trading. A weather market is still playing out in the U.S. Corn Belt, as weather forecasts are now “flip-flopping,” which is not unusual in the summertime in the Midwest. Traders are awaiting this morning’s USDA weekly export sales report and then Friday’s monthly USDA supply and demand 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.
Jim Wyckoff