Thursday, July 16–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. There are growing worries the surge in Covid-19 reported infections worldwide, including in the U.S., will force economies to be locked down again. U.S. markets are likely to be impacted by a very busy day of economic reports and earnings releases.
China became the first major economy to come out of contraction when it on Thursday reported better-than-expected second-quarter GDP at up 3.2% versus -6.8% in the first quarter, year-on-year. A 2.4% rise was forecast for the second quarter. China’s industrial production rose 4.8% in June versus up 4.4% in May. However, China’s retail sales in June were reported at -1.8% versus -2.8% in May. Despite the generally upbeat news, China’s main stock index, the Shanghai composite, fell by 4.5% and the sharpest drop since February.
The European Central Bank meets today and is expected to keep its emergency bond buying program and benchmark rates unchanged. Much of the potential future support for the European Union economy is contingent on the outcome of discussions over the 750 billion Euro recovery fund that start Friday.
The important outside markets today see Nymex crude oil prices weaker and trading around $40.80 a barrel. The U.S. dollar index is firmer after hitting a five-week low Wednesday. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.62% level.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, retail sales, the NAHB housing index, Treasury international capital data, and manufacturing and trade inventories.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls have the firm overall near-term technical advantage. 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 this week’s high of 3,233.25 and then at 3,250.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,150.00 and then at this week’s low of 3,119.00. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. While bulls remain in overall technical control, Monday’s price action scored a bearish “key reversal” down, which is one clue that a market top is in place. 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 bearish early today. Shorter-term technical resistance is seen at 10,600.00 and then at the overnight high of 10,698.25. On the downside, shorter-term support is seen at this week’s low of 10,358 and then at 10,250.00. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 180 24/32 and then at the July high of 181 14/32. Shorter-term support lies at this week’s low of 179 3/32 and then at 178 19/32. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls have the solid 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 neutral early today. Shorter-term resistance lies at this week’s high of 139.16.5 and then at the July high of 139.22.5. Shorter-term technical support lies at this week’s low of 139.00.5 and then at 138.23.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are lower on profit taking after hitting a four-month high on Wednesday. Bulls still have the firm overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1433 and then at this week’s high of 1.1467. Shorter-term support is seen at the overnight low of 1.1392 and then at 1.1350. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
August Nymex crude oil prices are lower in early U.S. trading. A gentle price uptrend on the daily chart has stalled out. 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 $41.26 and then at the June high of $41.63. Look for sell stops just below technical support at $40.00 and then at $39.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The weather market scare in the U.S. Corn Belt has evaporated and the concerns over U.S.-China deteriorating trade relations are bearish for corn and soybeans. However, wheat futures have taken off amid worries about shrinking world supplies. Beware, however, that there is stiff overhead longer-term technical resistance in wheat futures markets that could stop the rallies.
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