Wednesday, August 16–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher again Wednesday. U.S. stock indexes are also pointed toward higher openings when the New York day session begins. Equities bulls are having a very good week so far, as there has been a perceived de-escalation in the U.S. and North Korea stand-off regarding its nuclear missiles.
Reports said the U.S. and South Korean militaries will hold joint exercises next week, which are likely to again rile up North Korean leader Kim Jong Un. The U.S.-North Korea matter is not going to go away any time soon. Any flare-up in tensions is likely to see another rush by investors and traders into gold and U.S. Treasuries.
Gold prices are lower again in pre-U.S.-session trading. The safe-haven metal is taking it on the chin this week amid the keener “risk-on” trading attitudes in the marketplace.
The focal point of the marketplace Wednesday will be the release of the minutes of the last Federal Open Market Committee (FOMC) meeting that was held in July. There are mixed ideas on what are the Fed’s intentions. Fed Chair Janet Yellen said she would like to see interest rates rise more, but only gradually. However, recent very weak worldwide inflation reports play into the hands of those wanting the world’s central banks to keep their easy-money policies in place.
In overnight news, the Euro zone gross domestic product report showed second-quarter growth of 0.6% from the first quarter and was up 2.2%, year-on-year. Those numbers were close to market expectations.
The U.S. dollar index is higher again in early U.S. trading Wednesday and the greenback bulls are having a very good week. The index hit a three-week high on Tuesday. The stronger dollar this week is a negative for the precious metals markets. Meantime, Nymex crude oil futures are slightly higher in early U.S. trading Wednesday. Crude oil prices hit a three-week low Tuesday. Oil traders are now awaiting today’s weekly DOE liquid energy stocks report.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stock report, and new residential construction.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are modestly higher again in early U.S. trading. Bulls have regained upside momentum this week and prices are now not far below the recent contract and record high. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,473.25 and then at 2,480.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,460.00 and then at 2,450.00. 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. Bulls have regained upside momentum this week. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 5,945.00 and then at last week’s high of 5,972.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 5,895.00 and then at 5,875.00. 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 lower in early U.S. trading, amid less risk aversion this week. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above 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 the overnight high of 154 11/32 and then at 155 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 153 26/32 and then at 153 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are weaker on more profit taking and less risk aversion. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 126.06.0 and then at 126.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.00.0 and then at 125.28.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer again in early U.S. trading. Bears 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 bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 94.040 and then at 94.250. Shorter-term support is seen at the overnight low of 93.655 and then at 93.340. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly higher in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded recently. Look for buy stops to reside just above technical resistance at $48.00 and then at this week’s high of $49.16. Look for sell stops just below technical support at this week’s low of $47.02 and then at $46.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were mixed overnight. Grain market bears are in firm near-term technical control. Traders are looking ahead to the U.S. harvest of corn and soybeans, which is just a few weeks away.