Wednesday, September 4–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Traders and investors around the globe were cheered today when Hong Kong’s leader withdrew from consideration a proposed law that would allow the extradition of Hong Kong citizens to mainland China for criminal trials. This proposed new law had been one of the reasons for the major protesting seen in Hong Kong the past few months. However, it’s too early to determine if this reversal of Hong Kong’s leader on the matter will be enough to quell the civil unrest.
The China-U.S. trade war remains on the front burner of the world marketplace, and has escalated in recent days.
The leader of the International Monetary Fund, Christine Lagarde, said Wednesday the European Central Bank needs an accommodative monetary policy for a period of time due to threats on the horizon. This comes after the Euro zone reported its retail sales for July fell 0.6% from June.
Meantime, the U.K. economy could be tipping into recession amid the Brexit turmoil. Purchasing managers’ data for August, released today, was weaker than in July. The British pound this week hit a more-than-30-year low against the U.S. dollar.
The key “outside markets” today see Nymex crude oil prices higher and trading around $54.50 a barrel. The U.S. dollar index is lower on a normal downside correction after hitting a 27-month high Monday.
U.S. economic data due for release Wednesday includes the Federal Reserve’s beige book, weekly MBA mortgage applications survey, the weekly Johnson Redbook and Goldman Sachs retail sales reports, the international trade report, the ISM New York report on business, and the IDB-TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid more choppy trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,936.75 and then at last week’s high of 2,947.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,902.75 and then at this week’s low of 2,889.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,744.50 and then at last week’s high of 7,786.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,626.75 and then at this week’s low of 7,599.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading, on profit taking. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 166 4/32 and then at the contract high of 166 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 164 31/32 and then at this week’s low of 164 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading, on profit taking. 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 bearish early today. Shorter-term support lies at 131.20.0 and then at last week’s low of 131.13.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 132.08.5 and then at the contract high of 132.13.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is lower on profit taking after hitting a 27-month high Tuesday. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 98.490 and then at Tuesday’s contract high of 98.900. Shorter-term support is seen at 98.000 and then at 97.685. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
October Nymex crude oil prices are higher in early U.S. trading. Bears have the overall near-term technical advantage amid a seven-week-old price downtrend in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is above 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 $55.00 and then at this week’s high of $55.24. Look for sell stops just below technical support at the overnight low of $53.84 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were steady to higher in overnight trading. Corn was steady to 1 cent higher, soybeans around 2 cents up and wheat 4 to 5 cents higher. The grain futures are marking time, awaiting the start of the US soybean and corn harvests. There are still underlying bearish elements that will continue to limit buying interest in the grains, including the escalating U.S.-China trade war, weather in the Midwest that continues to be non-threatening, a strong US dollar on the foreign exchange market that makes US grains more expensive on the world market, and the big speculative “fund” traders continue to hold net short positions in the grains, amid bearish price charts. Bullish grain traders are hoping that all the bearish fundamental news has been factored into prices at present, and that the seasonal “harvest lows” are in place or close at hand.
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