Wednesday, August 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly down and European shares steady to firmer. The U.S. stock indexes are pointed to lower openings when the New York day session begins. Risk-off attitudes are keener at mid-week. The surging coronavirus delta strain is keeping traders and investors more tentative, especially heading into what history shows can be the rough months of September and October for the stock markets. Tuesday’s U.S. retail sales report was weaker than expected, with the spreading virus possibly to blame.
Federal Reserve monetary policy and the likely tapering of the central bank’s bond-buying program are near the front burner of the marketplace. This afternoon’s minutes from the last FOMC meeting in July will be parsed for any further clues on the timing of policy moves by the Fed. Many market watchers believe the Fed will start tapering this fall. Next week’s annual Jackson Hole Fed symposium is likely to see some clarification on the Fed’s monetary policy and the timing of any upcoming actions by the Fed.
In overnight news, the Euro zone July consumer price index was reported down 0.1% from June and up 2.2%, year-on-year. Those numbers are not problematic for price inflation.
The key outside markets today see the U.S. dollar index a bit weaker after solid gains posted Tuesday. Nymex crude oil futures prices are firmer and trading around $67.00 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.26%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, the weekly DOE liquid energy stocks report and the FOMC minutes.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading on mild profit taking after hitting a contract and record high Monday. Bulls still have the solid 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 4,476.50 and then at 4,500.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Tuesday’s low of 4,411.75 and then at 4,375.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls still have the solid chart advantage and prices are not far below the recent contract and record high. 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 to early today. Shorter-term technical resistance is seen at the contract high of 15,172.50 and then at 15,250.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 14,897.00 and then at 14,750.00. Sell stops likely reside 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 weaker in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 the overnight high of 165 6/32 and then at this week’s high of 165 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 164 20/32 and then at 164 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. 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 resistance lies at this week’s high of 134.19.5 and then at 134.25.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 134.02.0 and then at 133.26.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are near steady in early U.S. trading and hit a 12-month low overnight. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at Tuesday’s high of 1.1790 and then at last week’s high of 1.1811. Buy stops likely reside just above those levels. Shorter-term support is seen at 1.1700 and then at 1.1650. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $68.27 and then at $69.00. Look for sell stops just below technical support at this week’s low of $65.73 and then at $65.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were mixed to firmer overnight. Not much new this week. The markets are pausing and consolidating. The wheat market bulls are still in solid technical control and presently the leader of the pack, corn bulls have the overall chart advantage, and the soybean bulls have the slight overall near-term technical advantage. The big event of the week for the grain markets is the annual Pro Farmer Midwest Crop tour that got under way Monday and ends with corn and soybean yield estimates on Friday.
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