Thursday, July 30–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. Market participants are in a gloomier mood Thursday.
U.S. traders and investors are focused on some somber comments made by Fed Chairman Jerome Powell on Wednesday afternoon, at his press conference following the FOMC meeting that saw no change in U.S. monetary policy. “It looks like the data are pointing to a slowing pace of the recovery,” said Powell, citing evidence of a pullback by consumers and a slowdown in the rehiring of furloughed workers, particularly by small businesses.
The marketplace Thursday morning will get a first look at second-quarter U.S. gross domestic product and it won’t be pretty. Analysts forecast 1Q GDP to be down a stunning 35% from the first quarter. That would be the worst quarterly GDP reading since it began being recorded in 1947, and would beat the previous quarterly downturn by three-fold. Earlier today Germany released its 2Q GDP and it came in at -10.1% from 1Q and down 11.7%, year-on-year. Those numbers were the worst on record, dating back 50 years.
U.S. stock indexes had been supported recently by corporate earnings reports that have generally beat market expectations.
Meantime, the U.S. Congress is nowhere close to agreeing on a new stimulus package for Americans, heading into their August recess.
The important outside markets today see Nymex crude oil prices weaker and trading around $40.65 a barrel. The U.S. dollar index is a bit higher today after hitting a nearly two-year low on Wednesday. The yield on the benchmark U.S. Treasury 10-year note is currently trading around the 0.55% level.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, expected to show a figure of around 1.5 million new claims in the latest week.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage amid a 4.5-month-old price uptrend in place. The 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 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 this week’s high of 3,257.00 and then at last week’s high of 3,284.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,215.25 and then at last week’s low of 3,191.50. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. Bulls remain in firm overall technical control. However, the higher volatility at higher price levels is one clue of a topping process. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 this week’s high of 10,758.50 and then at 10,900.00. On the downside, shorter-term support is seen at 10,500.00 and then at this week’s low of 10,401. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher and hit a nearly five-month high in early U.S. trading. Bulls have the solid near-term chart 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 182 2/32 and then at 183 even. Shorter-term support lies at the overnight low of 181 10/32 and then at Wednesday’s low of 180 29/32. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher and hit a contract high 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 bullish early today. Shorter-term resistance lies at 140.00.0 and then at 140.08.0. Shorter-term technical support lies at the overnight low of 139.24.0 and then at 139.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
EURO CURRENCY
The September Euro currency futures are a bit weaker in early U.S. trading, but near this week’s nearly two-year high. Bulls have the solid 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 this week’s high of 1.1819 and then at 1.1850. Shorter-term support is seen at 1.1711 and then at this week’s low of 1.1655. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
September 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $41.39 and then at this week’s high of $41.93. Look for sell stops just below technical support at the overnight low of $40.50 and then at $40.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed to weaker in early U.S. pre-market trading. Bears are having the better week. Non-threatening U.S. weather and deteriorating U.S.-China trade relations are bearish. Wheat and soybeans are still in price uptrends on the daily charts, but just barely. Traders today will focus on the weekly USDA export sales report.
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