Friday, July 12–Jim Wyckoff’s Morning Markets Report
U.S. stock indexes are firmer and at or near record and contract highs in early U.S. trading. Asian and European stock indexes were also mostly up overnight. Easy monetary policies from the major central banks of the world continue to push world stock markets higher.
In overnight news, China’s exports in June were reported down 1.3%, year-on-year, according to official data Friday. Forecasters expected a 2.0% decline. China’s imports dropped by 7.3% in June, following an 8.5% decline in May. A drop of 3.8% was expected in June. This downbeat data underscores the damage China’s trade war with the U.S. has caused to the world’s second-largest economy.
A Wall Street Journal survey of economists showed those polled see a 30% chance of a U.S. recession within the next year. Sixty-eight percent of the economists see a U.S. interest rate cut at the end of July.
The U.S. economic highlight of the day will be the release of the producer price index for June, which is expected to be steady from May and up 0.2% in the “core” index, which excludes food and energy. On Thursday a slightly higher than expected reading on the U.S. consumer price index did get the attention of the marketplace.
The key “outside markets” today see Nymex crude oil prices higher and trading just around $60.50 a barrel. The U.S. dollar index is lower again early today.
U.S. economic data due for release Friday includes the PPI.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer and hit another contract and record high overnight. Bulls 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 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 bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,012.50 and then at 3,025.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 2,992.50 and then at this week’s low of 2,963.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher and near this week’s contract and record high. Bulls 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 7,963.25 and then at 8,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at Wednesday’s low of 7,811.25. 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 lower again and hit a four-week low in early U.S. trading. Surprisingly, bonds and notes have not seen gains in prices after Fed Chair Powell’s dovish comments Wednesday and Thursday. Bulls still have the overall near-term technical advantage but are fading. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 153 19/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 152 28/32 and then at 152 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. 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 to bearish early today. Shorter-term support lies at this week’s low of 126.25.0 and then at 126.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.02.0 and then at 127.08.0. 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 lower in early U.S. trading. The shorter-term moving averages for the dollar index 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 for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 96.775 and then at 97.000. Shorter-term support is seen at this week’s low of 96.415 and then at 96.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly higher and hit another six-week high in early U.S. trading. Bulls have the overall near-term technical advantage and have gained power this week. 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 bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $60.94 and then at $62.00. Look for sell stops just below technical support at $60.00 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were weaker in overnight trading. Corn, soybeans and wheat were all down around 1 to 3 cents ahead of the opening of the U.S. day session.
Traders have quickly digested and moved past Thursday’s USDA supply and demand report, which was deemed bearish for corn and friendly for soybeans and wheat. Yet, all three markets posted gains at the close Thursday, with solid gains reported in corn and wheat.
On this last trading day of the week, grain traders are focusing on weather in the U.S. midsection. A powerful tropical storm in the Gulf of Mexico could wind up dumping some needed rainfall in the eastern Corn Belt early next week, or not. Weather forecasters are not in agreement on the storm’s path once it reaches landfall. With much of the Corn Belt now in need of a good drink of water, weather forecasts are driving the grain markets. Next Monday looks to be one of the more important grain-trading days of the summer, as updated weather forecasts coming out of the weekend will drive prices and likely make for higher volatility on Monday.
Grain traders are a bit downbeat Friday morning following an apparent setback in U.S.-China trade negotiations. While both sides are talking, President Trump said on social media Thursday that China is not living up to its promise to buy more U.S. agricultural products. Chinese media is issuing negative-leaning reports on the trade discussions with the U.S.
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