Wednesday, August 14–Jim Wyckoff’s Morning Markets Report
Asian stock markets were mostly higher overnight and European stock markets were mostly lower. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Asian markets were lifted on an apparent thawing in the U.S.-China trade war. It appears the U.S. “blinked” Tuesday when U.S. trade officials said they are delaying until December some of the tariffs on Chinese imports that were set to go into effect on September 1. Economic data coming out of China Wednesday showed the number-two economy in the world has been significantly damaged by its trade war with the U.S.
The civil unrest in Hong Kong remains in focus among traders and investors worldwide. The Hong Kong airport has fully reopened Wednesday, but protestors are still there. President Trump said Tuesday that U.S. intelligence shows Chinese troops have moved to the border with Hong Kong.
Germany’s gross domestic product contracted by 0.1% in the second quarter from the first quarter and was up a paltry 0.4% year-on-year, it was reported Wednesday. Meantime, the Euro zone GDP growth was 0.2% in the second quarter from the first quarter, and up 1.1%, year-on-year. Those numbers were in line with expectations.
U.S. Treasury and world government bond yields continue to fall. The three-month Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve. However, the yield on the 30-year bond is still above that of the 10-year note. Still, the falling government bond yields, globally, paint a dim picture for the marketplace. The German bund hit another new record-low yield again Wednesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, import and export prices and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy trading. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,936.50 and then at this week’s high of 2,944.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,900.00 and then at this week’s low of 2,866.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. 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 neutral to bearish early today. Shorter-term technical resistance is seen at 7,700.00 and then at the overnight high of 7,767.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,655.75 and then at 7,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly higher and hit a contract high in early U.S. trading. Bulls have the strong overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 164 13/32 and then at 165 even. Buy stops likely reside just above those levels. Shorter-term support lies at 163 even and then at the overnight low of 162 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 8.0
September U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at 130.00.0 and then at the overnight low of 129.21.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 130.17.0 and then at the contract high of 130.27.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. Bulls have the firm 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 and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.690 and then at last week’s high of 97.930. Shorter-term support is seen at this week’s low of 97.125 and then at last week’s low of 96.980. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
September Nymex crude oil prices are lower in early U.S. trading. Bears have the slight overall near-term technical advantage amid a price downtrend in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below 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 the overnight high of $56.85 and then at this week’s high of $57.47. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mixed but mostly firmer in overnight trading. Corn was up around 3 cents, soybeans down 1 to 2 cents and wheat up 5 to 7 cents. Short covering from this week’s strong selling pressure is featured in corn and wheat futures at mid-week. US corn futures on Monday and Tuesday lost around 40 cents and hit three-month lows, while wheat futures lost around 30 cents and hit multi-month or contract lows. Corn and wheat traders may now have factored into futures prices the very bearish USDA report issued Monday. Monday’s report was deemed a bit friendly for soybeans, but beans could not rally much because of the big losses suffered in corn and wheat.
Grain markets showed little reaction to the U.S. delaying some of its new trade tariffs on China until December. There have been so many “false starts” on the U.S.-China trade fronts in recent months that grain traders need to see more than just upbeat rhetoric on the matter.
President Trump has reportedly asked Japanese Prime Minister Abe to buy U.S. farm products worth a “huge amount,” according to un-named Japanese and U.S. government sources. But again, grain traders want to see actual purchases and futures markets showed little reaction to the news.
Corn Belt weather sees temperatures rising a bit later this week, but with scattered rainfall hitting the region. It’s mid-August and the window is rapidly closing on any heat/dry stress developing for the soybean and corn crops. The next major weather threat would be an early frost in the Corn Belt that could reduce corn and soybean yields.
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