Friday, August 28–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. The U.S. stock indexes are also pointed toward mixed weaker openings when the New York day session begins. U.S. stock indexes have had a very good week, with the Nasdaq and S&P hitting record highs and are on track for the best week in two months.
The marketplace is still digesting Federal Reserve Chairman Jerome Powell’s speech on Thursday, in which he outlined the U.S. central bank’s new strategy to loosen its inflation guidelines and focus more on fuller employment. Most market watchers now reckon U.S. interest rates will remain low for a very long time. The shift in Fed policy will mostly likely reignite “the inflation trade,” which has historically been bullish for hard assets like raw commodities. In recent years the prospects for very low inflation and even deflation had muzzled many commodity market prices.
The Japanese yen appreciated versus the greenback Friday on news that Japan Prime Minister Abe is resigning due to health reasons.
The U.S. Republican convention ended Thursday, with the marketplace paying little attention to the event this week.
European shares were weaker Friday as Covid-19 cases are on the rise again in much of Europe.
The important outside markets today see Nymex crude oil prices near steady and trading around $43.00 a barrel. Hurricane Laura lashed Texas and Louisiana and shut in much of the U.S. Gulf coast oil and gas installations. That pushed gasoline futures prices to a five-month high this week. The U.S. dollar index lower and back near its recent two-year low. The yield on the U.S. Treasury 10-year note is trading around 0.75% today. Bond yields have risen this week, amid better trader and investor risk attitudes amid some recent better-than-expected U.S. economic data.
Gold prices are solidly higher Friday morning after a wild trading session Thursday, in which the yellow metal’s price was up over $30 at one point and down over $35 at another.
U.S. economic data due for release Friday includes personal income and outlays, advance economic indicators, the ISM Chicago business survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading and hit another record high. Bulls have the solid overall near-term technical advantage amid a five-month-old price uptrend in place. There are no early chart clues to suggest 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. 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 the overnight record high of 3,509.50 and then at 3,525.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Thursday’s low of 3,464.75 and then at Wednesday’s low of 3,436.75. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are modestly weaker after Thursday hitting another record high. Bulls remain in solid overall technical control. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-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 Thursday’s record high of 12,046.00 and then at 12,100.00. On the downside, shorter-term support is seen at Thursday’s low of 11,834.75 and then at 11,700.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are near steady in early U.S. trading after hitting a nine-week low overnight. Bears have gained the overall near-term chart advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 176 16/32 and then at 177 even. Shorter-term support lies at 176 even and then at the overnight low of 175 5/32. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are firmer in early U.S. trading after hitting a two-month low overnight. Bulls still have the overall near-term technical advantage but have faded badly this week and bears are working on starting a price downtrend. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 139.08.0 and then at 139.12.0. Shorter-term technical support lies at 138.28.5 and then at the overnight low of 138.23.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The September Euro currency futures are solidly higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. Prices have been trending up for over three months. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1923 and then at the August high of 1.1973. Shorter-term support is seen at the overnight low of 1.1814 and then at this week’s low of 1.1776. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
October Nymex crude oil prices are near steady in early U.S. trading. Bulls have the overall near-term technical advantage, but prices have been trading sideways at higher levels for weeks. A Wall Street Journal report this week said crude oil futures options traders are using a “strangle” strategy (selling puts and calls) to keep price action sideways and volatility low. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $43.78 and then at $44.00. Look for sell stops just below technical support at $42.50 and then at $42.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed to higher in early U.S. pre-market trading. Bulls are having a very good week, amid deteriorating late-season crop conditions for U.S. corn and soybeans. Meantime, China is keeping up its solid pace of purchases of U.S. corn and soybeans. Speculators are also showing more interest in the grain futures markets on the long side. Look for more upside price action in the grains in the near term.
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