Wednesday, July 17–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings, and are at or near their record and contract highs scored this week.
The important U.S. economic data point at mid-week is the afternoon beige book report from the Federal Reserve. It’s expected the report will lean dovish on U.S. monetary policy, given recent comments from Fed officials, including Chairman Jerome Powell. The Federal Open Market Committee (FOMC) meets on July 30-31.
In overnight news, the Euro zone consumer price index for June came in at up 0.2% from May and up 1.3%, year-on-year. Those numbers were just a bit above market expectations but still underscore the very low inflation in the major world economies. In fact, the German government auctioned a 30-year bond today, which fetched a yield of only 0.3%.
The key “outside markets” today see Nymex crude oil prices firmer and trading just below $58.00 a barrel. The oil market took a hit late Tuesday on reports that Iran may want to negotiate with the U.S. regarding U.S. sanctions on Iran. Meantime, the U.S. dollar index is slightly down after good gains posted Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the beige book, new residential construction, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices hover near 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 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,023.50 and then at 3,035.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 3,000.00 and then at 2,985.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are slightly higher and near this week’s contract and record high. Bulls have the solid overall near-term technical advantage. 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 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 7,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading, on a corrective bounce from recent declines. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-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 154 8/32 and then at 154 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 153 16/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at the overnight low of 126.31.0 and then at last week’s low of 126.25.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 127.08.0 and then at 127.12.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the July high of 97.195 and then at 97.265. Shorter-term support is seen at 96.650 and then at this week’s low of 96.375. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are higher in early U.S. trading, on a corrective bounce from strong losses Tuesday. Bulls still have the overall near-term technical advantage but a price uptrend on the daily chart is now in jeopardy. The shorter-term moving averages are neutral early today as the 4-day is even with 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 $59.00 and then at $60.00. Look for sell stops just below technical support at this week’s low of $57.07 and then at the July low of $56.04. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were weaker again in overnight trading. Corn was around 2 cents lower, soybeans fractionally down, and wheat around 4 to 5 cents lower.
Weather in the U.S. Corn Belt remains hot, but more rainfall is occurring and is expected to occur in the coming days than what forecasters were expecting a few days ago, when the markets were more bulled up. Next week is also offering rainfall chances for the Midwest.
Still, temperatures the next three days in the Corn Belt will be in the mid- to upper-90s, with even some 100-degree readings. With about 30% of the corn crop now in pollination, the high temperatures will likely curtail yield potential. There are also some extended weather outlooks that say the Midwest will see hotter-and-drier-than-normal weather in late July into early August. The bottom line for grain traders: this serious “weather market” in the grains has paused but it not likely finished for the season.
The other negative for the U.S. agricultural markets at mid-week is the apparent deterioration of the U.S.-China trade discussions, as neither side is talking much, even though U.S. trade officials said earlier this week they may travel to China at some point soon. Potentially ominous for the situation is a comment from President Trump on Tuesday saying his relationship with Chinese President Xi Jinping is not as close as it once was.
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