Wednesday, July 1–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to mostly up in overnight trading as the second half of 2020 gets under way. The U.S. stock indexes are pointed toward weaker openings when the New York day session begins after posting the best quarterly performance in 20 years in the second quarter. While the U.S. stock indexes are still in lofty positions there remain storm clouds on the horizon. The Covid-19 pandemic has hit the U.S. harder than most other countries and continues to spread at an alarming rate. The top Trump administration infectious disease expert said the pandemic progress in the U.S. is “going in the wrong direction” and said new cases could hit 100,000 a day if U.S. citizens don’t use better prevention methods. The U.S. is now reporting about 40,000 cases a day.
A highlight of the trading week has been a rally in gold prices to an 8.5-year high above $1,800 an ounce. August Comex gold hit a high of $1,807.70 overnight. Technical charts are very bullish for the yellow metal at present, suggesting more gains in the near term, including a challenge of the all-time record high of $1,920 in gold futures, scored in 2011.
In overnight news, the Euro zone June manufacturing purchasing managers index (PMI) came in at 47.4 versus 39.4 in May. A reading below 50.0 suggests contraction in the sector.
It’s a holiday-shortened U.S. trading week, as markets are closed Friday for the Independence Day holiday. However, the next two days will be very busy for U.S. economic data releases that are likely to move markets. Wednesday, sees the weekly MBA mortgage applications survey, the challenger job-cuts report, the ADP national employment report, the U.S. manufacturing PMI, the ISM manufacturing report on business, construction spending, the weekly DOE liquid energy stocks report, the global manufacturing PMI, domestic auto industry sales and the FOMC minutes from the last Fed meeting. The U.S. economic highlight of the week will be Thursday morning’s monthly jobs report from the Labor Department. In June, the key non-farm payrolls number is expected to be up 3.15 million, with the unemployment rate forecast at 12.4%. A slew of other important U.S. economic reports is also out on Thursday.
The important outside markets today see Nymex crude oil prices higher and trading around $40.35 a barrel. The U.S. dollar index is slightly up early today. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.68% level.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are modestly down in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has been sideways for two weeks. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,101.25 and then at 3,125.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Tuesday’s low of 3,030.25 and then at 3,000.00. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are weaker in early U.S. trading. Bulls remain in firm overall technical control. 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 early today. Shorter-term technical resistance is seen at this week’s high of 10,171.50 and then at the record high of 10,296.25. On the downside, shorter-term support is seen at 10,000.00 and then at 9,900.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading on a corrective pullback from recent good gains. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 178 16/32 and then at 179 even. Shorter-term support lies at 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 solid near-term technical advantage as prices trade sideways at higher levels. 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 bearish early today. Shorter-term resistance lies at the overnight high of 139.05.5 and then at this week’s high of 139.14.0. Shorter-term technical support lies at 138.26.5 and then at 138.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are lower in early U.S. trading. Bulls have the slight overall near-term technical advantage but have faded as trading has been choppy. The shorter-term moving averages for the Euro 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 Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1263 and then at this week’s high of 1.1307. Shorter-term support is seen at this week’s low of 1.1208 and then at the June low of 1.1189. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
August Nymex crude oil prices are higher in early U.S. trading. A price uptrend is in place on the daily chart. 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 bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $40.58 and then at $41.00. Look for sell stops just below technical support at the overnight low of $39.54 and then at $39.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mostly higher in early U.S. pre-market trading. Grain market bulls are suddenly awakening following a shockingly bullish USDA data on Wednesday—especially for corn. While it’s likely the bullish USDA data put in market bottoms for corn and soybeans ( with wheat likely bottoming out, too, as a follower) it will still very likely take a weather market
developing in the U.S. Corn Belt in the coming weeks to produce solid price uptrends. Now the longer-term outlooks are warming up and drier, which the bulls are watching closely.
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