Monday, July 1–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. indexes today are at or near record highs amid keener risk appetite among traders and investors worldwide.
The weekend Group of 20 meetings taking place in Japan featured a face-to-face meeting between U.S. President Trump and Chinese President Xi regarding their trade war. That meeting saw the U.S. back off on some of its threatened sanctions, while China said it would buy more U.S. agricultural products, and both sides agreed to restart trade negotiations. This was deemed a positive by the marketplace, but most agree much heavy lifting needs to be done to get a complete and final U.S.-China trade agreement.
Also, President Trump made a surprise visit to North Korea over the weekend and met with North Korean leader Kim Jong Un. The U.S. and North Korea said they would resume talks on North Korea’s nuclear program.
Gold dropped just over $20 to start the trading week and trading month, on the positive news on the geopolitical fronts. U.S. government bond yields also rose Monday but European bond yields dipped.
There was a mixed bag of economic data coming out Europe Monday. The Euro zone May unemployment rate dropped to 7.5%, which is the lowest in over 10 years. However, U.K. manufacturing growth was the slowest in six years. The Eurozone manufacturing purchasing managers index (PMI) came in at 47.8 in June, which was just a bit better than expectations, but any reading below 50.0 suggests contraction in the sector.
The key “outside markets” today see Nymex crude oil prices solidly higher, hitting a five-month high and trading around $60.00 a barrel. The OPEC oil cartel over the weekend reached a deal to keep its production curtailed. Meantime, the U.S. dollar index is higher in early U.S. trading.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, the global manufacturing PMI and construction spending.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly up and hit a contract high in early U.S. trading today. Bulls have the solid overall near-term technical advantage. 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 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 3,000.00 and then at 3,015.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,963.00 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.5
September Nasdaq index futures: Prices are solidly higher and hit a two-month high in early U.S. trading. Bulls have the strong 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 to bullish early today. Shorter-term technical resistance is seen at the contract high of 7,910.75 and then at 7,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,772.75 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are weaker in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at Friday’s high of 155 22/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 24/32 and then at last week’s low of 154 18/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bearish early today. Shorter-term support lies at the overnight low of 127.17.0 and then at last week’s low of 127.12.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 128.00.0 and then at the contract high of 128.08.5. 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 still 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.160 and then at 96.250. Shorter-term support is seen at the overnight low of 95.775 and then at 95.560. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
August Nymex crude oil prices are higher and hit a five-week high above $60.00 a barrel in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above 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 to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $60.28 and then at $61.00. Look for sell stops just below technical support at $59.00 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures prices were mixed overnight. Corn is fractionally up, soybeans up around 1 to 2 cents and wheat down around 3 cents. The U.S.-China summit meeting between Presidents Trump and Xi over the weekend produced results that were about as expected, but still slightly friendly for the U.S. grain markets and China apparently pledged to buy more U.S. agricultural products in exchange for eased U.S. sanctions. Grain traders are still trying to digest the surprising USDA reports on Friday that showed a sharp drop in soybean acres and a rise in corn acres. That data pushed corn prices sharply lower and soybean prices moderately higher. Wheat was pulled lower by the big drop in corn prices. Weather in the midwest U.S. now leans toward the bears, as drier and warmer conditions over the weekend and in the coming days will benefit the crops. Historically, the first trading day for the grains after the U.S. Independence Day, which comes this Friday, is extra important. Grain price trends can be reversed or existing trends accelerate during the critical early-July timeframe. Grain traders will closely examine today’s weekly USDA export inspections 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