Monday, August 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower to start the trading week. Traders and investors were disappointed that last week’s Jackson Hole, Wyoming central bankers meeting did not offer any new guidance on the monetary policies of the world’s major central banks. U.K. markets are closed Monday for a holiday. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Gold prices are higher and have pushed above the key $1,300.00 level in overnight trading. A slumping U.S. dollar index is supporting the gold market bulls.
In another sign of worrisome deflationary pressures gripping world economies, the German government on Monday set a zero percent coupon on its two-year government note (Schatz) to be auctioned Tuesday.
The key “outside markets” early Monday see the U.S. dollar index lower and hitting a multi-month low. The greenback bears remain in firm near-term technical control to suggest still more downside pressure on the greenback.
The Euro currency rose to a 2.5-year high overnight as ECB president Mario Draghi last Friday at his Jackson Hole speech failed to mention the Euro’s strength. Traders took that to mean Draghi must not be that worried about the Euro’s recent appreciation.
Nymex crude oil futures are weaker Monday. A hurricane has flooded a Houston, Texas and surrounding areas, including a major gasoline refinery. This will impact supplies of U.S. gasoline, and demand for crude oil, in the coming weeks.
U.S. economic data due for release Monday includes the advance economic indicators report and the Texas manufacturing outlook survey. The major U.S. data point of the week is Friday’s employment situation report from the Labor Department.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly lower in early U.S. trading. There are still chart clues that a near-term market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at last week’s high of 2,452.50 and then at 2,465.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,432.75 and then at 2,425.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are slightly lower in early U.S. trading today. There are still chart clues that signal that a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 5,850.00 and then at last week’s high of 5,891.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,800.00 and then at the August low of 5,760.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are slightly higher in early U.S. trading. Prices Friday hit a two-month high. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart. 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 early today. Shorter-term technical resistance is seen at last week’s high of 155 16/32 and then at 156 even. 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: 5.5
December U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart. 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 resistance lies at last week’s high of 126.22.0 and then at the June high of 126.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 126.16.0 and then at Friday’s low of 126.10.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage and gained more power Friday and today. The shorter-term moving averages for the dollar index are bearish early today as the 4-day is below the 9-day and 18-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 92.500 and then at 93.000. Shorter-term support is seen at the overnight low of 92.050 and then at 91.750. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
October Nymex crude oil prices are lower. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. Look for buy stops to reside just above technical resistance at the overnight high of $48.20 and then at last week’s high of $48.91. Look for sell stops just below technical support at last week’s low of $47.06 and then at the August low of $46.62. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were weaker overnight. Grain market bears remain in solid overall near-term technical control. Traders are looking ahead to the U.S. harvest of corn and soybeans, which is just a few weeks away. Traders are also wondering when the grains will put in their “harvest lows.”