Wednesday, September 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Global trade worries and the potential drag on the major economies of the world are weighing on equities this week. The U.S. and Canada are deadlocked on trade negotiations, while there are concerns the U.S. will slap more trade sanctions on China. Asian stock markets were also pressured today by weak economic data coming out of China.
Secondary currency markets, including the Argentine peso and Turkish lira, remain under pressure against the U.S. dollar. There are still worries this matter could turn into something more serious that impacts the global financial system.
In overnight news, the Euro zone composite purchasing managers index (PMI) came in at 54.4 in August versus 54.2 in July. The August reading was right in line with market expectations. A number above 50.0 suggests growth in the sector.
The key outside markets today find the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are lower on a corrective pullback after hitting a 3.5-month high on Tuesday. Also, the storm in the Gulf of Mexico did not reach hurricane status, as some initially reckoned it would.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Johnson Redbook and Goldman Sachs retail sales reports, the international trade in goods and services report, and the ISM New York report on business.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker on mild profit taking after hitting a record high last week. The bulls still have the solid overall near-term technical advantage amid an uptrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 2,916.75 and then at the contract high of 2,921.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,889.50 and then at 2,875.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index December futures: Prices are weaker in early U.S. trading, but still not far below last week’s contract and record high. Bulls still have the solid overall near-term technical advantage. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the contract high of 7,723.50 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,623.50 and then at 7,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are firmer in early U.S. trading, on a corrective bounce from Tuesday’s selling pressure. Bulls still have the overall near-term technical advantage but are fading and need to show fresh power soon to keep their chart edge. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 143 15/32 and then at 144 even. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 143 2/32 and then at 142 24/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 resistance lies at the overnight high of 120.02.5 and then at Tuesday’s high of 120.09.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 119.27.5 and then at 119.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is near steady in early U.S. trading. The bulls still have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 95.280 and then at 95.500. Shorter-term support is seen at Tuesday’s low of 94.695 and then at 94.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
October Nymex crude oil prices are lower on profit taking after hitting a 3.5-month high on Tuesday. The bulls appear to be exhausted now. The shorter-term moving averages are still 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $69.57 and then at $70.00. Look for sell stops just below technical support at the overnight low of $68.67 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were mixed overnight. Worries on the U.S.-world trade front continue to pressure the grains. However, very wet weather in parts of the Corn Belt at present is prompting ideas of harvest delays. Corn and soybean bears are still in control amid big U.S. crop potential. Wheat is being pulled down by corn and soybeans, despite some global production shortfalls.
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