Monday, July 22–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed 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 last week.
Geopolitical tensions are higher to start the trading week, on news that Iran’s military late Friday seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Iran’s confrontation with the U.S. and the U.K. will probably escalate in the coming weeks, with the concern in the marketplace being a major U.S. military strike against Iran, which could disrupt oil shipping in the Persian Gulf.
Focus of traders and investors remains on the major central banks of the world and their lean toward more accommodative monetary policies amid worries about slowing global economic growth. The European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.
The key “outside markets” today see Nymex crude oil prices higher and trading around $56.50 a barrel. Meantime, the U.S. dollar index is slightly higher today.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. Bulls still have the solid overall near-term technical advantage. 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 neutral early today. Today, shorter-term technical resistance comes in at 3,000.00 and then at the contract high of 3,023.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,969.50 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading, and not far below last 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 below 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 7,900.00 and then at the contract high of 8,001.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 7,815.25 and then at 7,750.00. 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 firmer 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 bullish early today. Shorter-term technical resistance is seen at last 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 16/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are near steady 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 bullish early today. Shorter-term support lies at the overnight low of 127.11.0 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the 127.20.0 and then at last week’s high of 127.27.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 last week’s high of 97.100 and then at the July high of 97.195. Shorter-term support is seen at last week’s low of 96.320 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading. Bulls have faded recently as a price uptrend on the daily chart was negated last week. 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 even with 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 $57.50. Look for sell stops just below technical support at the overnight low of $55.87 and then at last week’s low of $54.85. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were lower in overnight trading. Corn was down 6 to 7 cents, soybeans off around 6 cents, and wheat 4 to 6 cents down.
Midwest U.S. weather over the weekend saw beneficial rains over much of the region, boosting growth prospects for corn and soybean plants. Also, temperatures have cooled well down from the scorching highs seen late last week. The lower temperatures this week will aid the critical growth phase of the corn crop.
USDA weekly crop progress data will be released Monday afternoon and is expected to show the U.S. corn condition rating at 59% in the good to excellent categories versus 58% last week. The U.S. soybean condition rating is seen at 54% good to excellent, which is unchanged from last week’s USDA reading.
U.S.-China trade negotiations may be making some progress. Chinese media over the weekend said Chinese companies are inquiring with U.S. companies regarding agricultural product purchases. President Trump is demanding China buy more U.S. agricultural products, or the U.S. might slap more trade sanctions on China. Any significant breakthrough in the trade talks would likely provide an immediate boost to U.S. grain market prices.
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