Wednesday, August 26–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins, including the Nasdaq again at a record high. The U.S. stock indexes may be ready to pause at mid-week after hitting record highs in the Nasdaq and S&P 500 this week. The past several weeks have seen generally less volatile and quieter trading conditions, as U.S. and European traders and investors focus more on family vacations and less on markets. Look for more active trading in many stock and financial markets following the U.S. Labor Day holiday.
Traders and investors are watching two big events this week: the U.S. Republican national convention in which President Trump will accept his party’s nomination. So far the convention has not been markets-sensitive. Also, the annual Federal Reserve Symposium that has been traditionally held in Jackson Hole, Wyoming but this year will be virtual, begins Thursday. Fed Chairman Jerome Powell is scheduled to speak Thursday morning. Traders will closely scrutinize his comments on the strength of the U.S. economic recovery and prospects for growth in the coming months.
The important outside markets today see Nymex crude oil prices slightly down and trading around $43.23 a barrel. Hurricane Laura in the Gulf of Mexico is bearing down on Texas and Louisiana and has shut in much of the U.S. Gulf coast oil and gas installations. That has pushed gasoline futures prices to a five-month high this week. The U.S. dollar index is a bit firmer but not far above its recent two-year low. The yield on the U.S. Treasury 10-year note has risen to around 0.7% this week, in another sign of rising confidence in the marketplace.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady and close to this week’s record high in early U.S. trading. 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 early today. Today, shorter-term technical resistance comes in at 3,450.00 and then at 3,475.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Tuesday’s low of 3,426.75 and then at this week’s low of 3,393.50. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher and hit another record high in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at 11,800.00 and then at 11,900.00. On the downside, shorter-term support is seen at 11,650.00 and then at this week’s low of 11,528.25. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower again in early U.S. trading. Bulls still have the overall near-term chart advantage but are fading this week and need to stabilize the market soon. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 178 15/32 and then at 179 even. Shorter-term support lies at the August low of 177 16/32 and then at 177 even. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the firm near-term technical advantage but are fading this week. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 139.09.0 and then at Tuesday’s high of 139.15.5. Shorter-term technical support lies at 139.00.0 and then at the August low of 138.28.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are weaker in early U.S. trading. Bulls still 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at last Friday’s high of 1.1888 and then at 1.1926. Shorter-term support is seen at this week’s low of 1.1789 and then at last week’s low of 1.1758. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
October Nymex crude oil prices are slightly down in early U.S. trading. Bulls have the overall near-term technical advantage, but prices have been trading sideways at higher levels for weeks. The shorter-term moving averages are neutral early today as the 4-day is even with 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 $43.57 and then at the August high of $43.68. Look for sell stops just below technical support at $42.50 and then at $42.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are narrowly mixed 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 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