Monday, August 12–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. The first trading day of the week sees a “risk-off” trader and investor mentality. There is once again protesting in Hong Kong, which has shut down its main airport. Market watchers wonder how long mainland China will allow the civil unrest.
Gold prices and U.S. Treasury prices are up Monday, on safe-haven demand.
China’s central bank on Monday set its currency, the yuan, exchange rate with the U.S. dollar at 7.0211, which is above the 7 level the U.S. has deemed problematic. This exchange rate will continue to be closely monitored. Most of the world marketplace views the U.S.-China trade negotiations as having deteriorated in August.
The key “outside markets” today see Nymex crude oil prices down and trading around $53.75 a barrel. The U.S. dollar index is trading slightly up in early U.S. action.
U.S. economic data due for release Monday is light and includes the monthly Treasury budget statement and the USDA monthly supply and demand report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. 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 below 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 the overnight high of 2,931.00 and then at last week’s high of 2,940.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,870.00 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at last week’s high of 7,738.50 and then at 7,775.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,550.00 and then at 7,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the solid overall 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 to bullish early today. Shorter-term technical resistance is seen at 163 even and then at 163 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 161 18/32 and then the overnight low of 161 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at 129.25.0 and then at the overnight low of 129.19.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Friday’s high of 130.08.5 and then at 130.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.550 and then at last week’s high of 97.930. Shorter-term support is seen at last week’s low of 96.980 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
September Nymex crude oil prices are lower in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $54.44 and then at $55.00. Look for sell stops just below technical support at $53.00 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were lower in overnight trading, on risk aversion in the marketplace to start the trading week and on non-threatening weather in the US Midwest. Corn was down around 3 cents, soybeans down around 5 cents and wheat off 3 to 4 cents.
The most important USDA report of late summer is due out Monday morning–the August USDA supply and demand report, to be released 12:00 noon EDT. The trade estimates US planted corn acreage at around 88 million with an average yield of around 165 bushels per acre. Total US corn production is seen at just over 13 billion bushels. US soybean planted acreage is estimated at around 81 million with an average yield of around 48 bushels per acre and US production at 3.8 billion bushels. US ending corn stocks are seen at 1.6 billion bushels for the 2019/20 marketing year, at 820 million bushels for soybeans, and around 1 billion bushels for US wheat.
The USDA weekly crop progress report today sees traders looking at the US corn condition rating at 56% good to excellent versus 57% in the same category last week. The US soybean condition rating is forecast at 53% good to excellent versus 54% last week.
Corn Belt weather this week sees temperatures rising a bit, but with scattered rainfall expected in the region. It’s nearing mid-August now, and the window is closing on any heat/dry stress developing for the soybean crops. The next major weather threat would be an early frost in the Corn Belt.
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