Tuesday, July 30–Jim Wyckoff’s Morning Markets Report
Asian stocks were mostly firmer and European stocks were mostly weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.
A feature in overnight trading was a further decline in the British pound, as the currency fell to a nearly 2.5-year low on worries about a “hard Brexit.” New Prime Minister Boris Johnson is seen as more hard-line on U.K. negotiations with the European Union.
The World Gold Council reported emerging central banks are purchasing gold at a faster pace this summer. Lower government bond yields are attracting more buying interest in the yellow metal.
The main economic event of the week begins on Tuesday when the Federal Reserve’s Open Market Committee (FOMC) meets to determine monetary policy. The Fed is expected to lower interest rates at the conclusion of the meeting Wednesday afternoon.
Then on Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.
Also in focus this week is U.S.-China trade talks that have resumed at a high level. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today. Expectations are low key for any significant breakthroughs.
The key “outside markets” today see Nymex crude oil prices higher and trading around $57.50 a barrel. The U.S. dollar index is slightly up and today hit another new high for the year overnight.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, personal income and outlays, pending home sales, the consumer confidence index and the S&P Corelogic home price index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading and not far below last week’s contract and record high. 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,029.50 and then at 3,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 3,000.00 and then at 2,987.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower in early U.S. trading and not far below last week’s record and contract 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 8,020.00 and then at the contract high of 8051.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,917.25 and then at 7,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly firmer in early U.S. trading. Bulls have the firm overall near-term technical advantage. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 155 even and then at last week’s high of 155 18/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 19/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at Monday’s low of 127.09.0 and then at last week’s low of 127.01.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 127.16.0 and then at 127.20.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady and hit another contract and new high for the year overnight. Bulls have the solid 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.960 and then at 98.000. Shorter-term support is seen at Monday’s low of 97.640 and then at 97.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading. Bulls are starting out the week stronger. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $58.00 and then at $59.00. Look for sell stops just below technical support at the overnight low of $57.02 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were weaker in overnight trading, as weekly USDA crop progress reports out Monday afternoon showed the corn and soybean crops not in too bad of shape considering the late planting. Corn was down around 2 cents, soybeans down 1 to 2 cents and wheat was 1 to 2 cents weaker.
USDA reported the U.S. corn condition rating at 58% good to excellent versus 57% last week. Soybeans were rated at 54% good to excellent compared to 54% last week. Hard red spring wheat condition was 73% good to excellent versus 76% last week. Hard red winter wheat harvesting was 75% complete versus 84% last year.
USDA weekly export inspections out Monday showed US soybean exports to China at the best levels in five months. US soybean shipments of 600,000 metric tons were inspected for export to China last week. High-level U.S.-China trade negotiators are meeting in China this week. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today. Expectations are low for any significant breakthroughs.
The weather in the U.S. Corn Belt most of this week is cooler but still a bit dry, but some rains are forecast for the weekend. This weather is now leaning slightly bearish for the corn and soybean futures markets.
Trade in the U.S. grain markets could be choppy and sideways for the next two weeks, ahead of the all-important Aug. 12 monthly USDA report, at which time the size of the U.S. crops will be updated, as well as revised planted acres for U.S. corn and soybeans. With the very late planting of most of the corn and soybean crop, grain analysts have had a tougher time gauging the crop’s yield potential and the acreage mix.
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