Thursday, August 3–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly weaker overnight, in the wake of the Dow Jones Industrial Average setting a record high above 22,000 on Wednesday. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
Gold prices are solidly lower in pre-U.S.-session trading, on profit taking from recent gains and amid a quieter geopolitical front this week.
In a worrisome report overnight, the Paris-based OECD think tank said global inflation in the 20 largest countries has dropped to its lowest level in eight years. The OECD said consumer prices in the group of countries rose at a 2.0 rate in June, from a year earlier. This news falls into the camp of the monetary policy doves who do not want the major central banks of the world to tighten their monetary policies. The OECD June reading on consumer inflation was up 2.2%.
A World Gold Council report Thursday shows worldwide demand for gold dropped 10% in the second quarter, versus the same period last year. Demand was down 14% in the first half of 2017. A slowdown in demand for exchange traded funds (ETFs) was mostly to blame, the report said. Other highlights of the report showed slack demand for gold coming out of China, which historically has seen high consumer demand for the metal.
As of this writing traders were awaiting the results of the Bank of England’s regular monetary policy meeting. No change in policy was expected by the BOE.
The U.S. dollar index is slightly higher in pre-U.S. day session trading, on a tepid bounce after hitting a 13-month low on Wednesday. Meantime, Nymex crude oil futures are slightly higher and trading just below $50.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the global services PMI, the U.S. services PMI, manufacturers’ shipments and inventories, the ISM non-manufacturing report on business, and monthly retail chain store sales.
Traders are looking ahead to Friday’s U.S. employment report from the Labor Department. That report is arguably the most important U.S. data point of the month. Forecasts call for the key non-farm payrolls number to come in at up 180,000. The ADP national employment report on Wednesday showed a rise of 178,000 jobs. A non-farm jobs reading on Friday morning that significantly misses market expectations is likely to shake up many markets.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly down in early U.S. trading but just below last week’s contract and record high. The bulls have the solid overall near-term technical advantage and there are no strong chart clues that a market top is close at hand. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the contract high of 2,480.50 and then at 2,490.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,465.25 and then at last week’s low of 2,457.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index September futures: Prices are slightly higher in early U.S. trading today. The bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below 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 this week’s high of 5,947.50 and then at 5,975.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,900.00 and then at 5,870.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has been choppy recently. 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 this week’s high of 154 18/32 and then at 154 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 31/32 and then at 153 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage but trading has turned choppy. 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 resistance lies at this week’s high of 126.08.5 and then at 126.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 126.00.0 and then at 125.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher in early U.S. trading, on a tepid bounce after prices hit a 13-month low on Wednesday. Bears still have the solid 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. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 93.000 and then at this week’s high of 93.385. Shorter-term support is seen at this week’s low of 92.390 and then at 92.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly higher in early U.S. trading. Prices have been trending higher for six weeks. Look for buy stops to reside just above technical resistance at $50.00 and then at this week’s high of $50.43. Look for sell stops just below technical support at the overnight low of $49.12 and then at this week’s low of $48.37. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were lower overnight. The weather market that had played out over the past few weeks is dead in the water. That’s bearish. Grain market bears have the near-term technical advantage. Traders will examine this morning’s weekly USDA export sales report.