Monday, July 31–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
Gold prices are slightly lower in pre-U.S.-session trading after scoring a six-week high overnight. The gold bulls still have good upside near-term technical momentum, amid a steep price uptrend in place on the daily bar chart.
The weekend news that North Korea launched another ballistic test missile, which experts say could now reach well into the U.S. mainland, is not having a major impact on world markets. However, this matter could well be the next geopolitical flashpoint, as the U.S. says it will not allow North Korea to have such a capability.
Russia over the weekend announced it is expelling 750 U.S. diplomats in retaliation for U.S.-imposed sanctions on Russia. That news has no impact on markets, but underscores frayed relations between the two super powers.
In overnight news, there was a batch of economic data coming out of the Euro zone. The June jobless rate was 9.1% versus 9.2% in May. The consumer price index for July came in at up 1.3%, year-on-year, versus the same reading in June.
China’s manufacturing purchasing managers’ index (PMI) came in at 51.4 in July. Forecasts called for a reading of 51.6. A number above 50.0 suggests expansion in the sector.
The U.S. dollar index is firmer in early U.S. trading, on corrective bounce from recent selling pressure. The index hit a 13-month low last week. Meantime, the other “outside market” sees Nymex crude oil futures slightly lower on mild profit taking after the market hit a two-month high just above $50.00 a barrel overnight. Oil bulls still have upside technical momentum.
U.S. economic data due for release Monday includes the ISM Chicago business survey, pending home sales and the Texas manufacturing outlook survey. The key report of the week will be Friday’s U.S. jobs report for July from the Labor Department. The non-farm payrolls number of that report is expected to be up 180,000.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly higher in early U.S. trading and not far below last week’s contract and record high. The bulls have the solid overall near-term technical advantage and there are no strong chart clues that a market top is 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 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 2,480.50 and then at 2,490.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,466.25 and then at last week’s low of 2,457.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index September futures: Prices are firmer in early U.S. trading today. Prices last Thursday hit a contract and record high early on. Prices then reversed course about midday and scored a bearish “key reversal” down on the daily bar chart, which is a technical clue that a near-term market top is in place. However, price gains early this week would negate that chart pattern. The bulls right now do still 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 5,950.00 and then at the contract high of 5,995.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,897.25 and then at last week’s low of 5,844.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are steady in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has been choppy recently. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 153 16/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 even and then at 152 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are steady in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has turned choppy. 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 neutral early today. Shorter-term resistance lies at the overnight high of 126.01.5 and then at 126.06.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.27.5 and then at 125.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer in early U.S. trading on a corrective bounce. Prices last week hit a 13-month low. Bears still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at 93.500 and then at 94.000. Shorter-term support is seen at last week’s low of 93.000 and then at 92.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly lower in early U.S. trading after hitting a two-month high above $50.00 a barrel overnight. Prices have been trending higher for six weeks. Look for buy stops to reside just above technical resistance at the overnight high of $50.06 and then at $51.00. Look for sell stops just below technical support at $49.00 and then at $48.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were lower overnight. This week’s weather forecast for the U.S. Corn Belt calls for moderate temperatures but not much rain. Traders are reading that as bearish. However, many parts of the Corn Belt are in drought conditions. It’s still too early to call this latest weather market dead.