Friday, July 19–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session beings. The U.S. indexes hit record and contract highs earlier this week.
The marketplace is still buzzing about remarks made by influential New York Federal Reserve Bank President John Williams Thursday afternoon. He suggested the Fed should be more aggressive in its monetary policy actions to prevent a slowdown in the U.S. economy. That led some market watchers to believe the Fed could do a 0.5% rate cut at its late-July FOMC meeting. Later, the Federal Reserve tried to “walk back” Williams’ comments. St. Louis Fed President James Bullard on Friday said a 0.25% U.S. rate cut in the near term is appropriate.
Gold prices hit a six-year high overnight on the dovish Federal Reserve notions, the U.S. dollar Thursday afternoon dropped and U.S. Treasury prices rallied in the aftermath of Williams’ remarks.
The key “outside markets” today see Nymex crude oil prices firmer and trading just below $56.00 a barrel. The oil market bulls have faded this week amid talk the U.S. and Iran could start talking, regarding U.S. sanctions on Iran. However, there were also reports the U.S. military and Iran’s military are challenging each other near the Strait of Hormuz, including unconfirmed reports the U.S. shot down an Iranian drone. Meantime, the U.S. dollar index is higher today on a rebound following the sell off Thursday following Williams’ comments.
U.S. economic data due for release Friday is light and includes the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are not far below this week’s record highs. There are no early chart clues of a market top being close at hand. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,023.50 and then at 3,025.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,974.50 and then at 2,963.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are firmer in early U.S. trading, and not far below this week’s record high. Bulls have the solid overall near-term technical advantage. 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 above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract high of 8,001.50 and then at 8,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at this week’s low of 7,833.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly down in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 155 9/32 and then at 155 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 18/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly down in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 127.14.5 and then at 127.07.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.27.5 and then at 128.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is higher in early U.S. trading. The shorter-term moving averages for the dollar index 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 dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.100 and then at the July high of 97.195. Shorter-term support is seen at this week’s low of 96.320 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
August Nymex crude oil prices are higher in early U.S. trading, on a corrective bounce from strong losses this week. Bulls have faded as a price uptrend on the daily chart has been negated. 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 early today. Look for buy stops to reside just above technical resistance at $57.00 and then at $58.00. Look for sell stops just below technical support at this week’s low of $54.72 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were steady to higher in overnight trading. Corn was steady, soybeans up around 3 cents, and wheat 2 to 3 cents higher. Short covering and a corrective bounce are featured late this week, after solid losses the grains have suffered this week.
The Midwest U.S. weather did a classic “flip-flop” to the weather forecasters who last week were calling for hot and dry conditions for this week. While the Corn Belt is getting hot weather late this week, there have been much greater rainfall totals in the region this week than what the weather forecasters were predicting.
The corn market has gotten little support from scorching temperatures in the Corn Belt the last part of this week, which come right during the critical pollination stage for much of the U.S. corn crop.
Grain traders are not likely to add much selling pressure to the markets today, heading into the weekend, and when the weather patterns in the Midwest could shift again and surprise the markets.
The other negatives for the U.S. agricultural markets this week are slack worldwide export demand and a deterioration of the U.S.-China trade negotiations. China cancelled some soybean purchases in Thursday’s weekly USDA export sales report. This comes at a time when President Trump is demanding China buy more U.S. agricultural products, or the U.S. might slap more trade sanctions on China.
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