Friday, July 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global equity markets were steady to narrowly mixed overnight, in quieter dealings amid a lack of fresh, major fundamental news to drive the markets. A lazy, hazy summertime trading atmosphere has enveloped U.S. and European stock markets. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
Gold prices are firmer and hit a three-week high overnight. Prices are in a two-week-old uptrend and bulls have momentum.
It appears the “take away” from this week’s news events and markets’ price action is growing notions the major central banks of the world are not in a big hurry at all to tighten their monetary policies, with a major reason being very tame price inflation expectations. European Central Bank President Mario Draghi on Thursday sounded a surprisingly dovish tone on ECB money policy. The Bank of Japan on Thursday lowered its inflation expectations. And the week before, Fed Chair Janet Yellen spoke before the U.S. Congress and suggested the Fed will only very gradually raise U.S. interest rates.
The aftermath of less hawkish rhetoric coming from world central bankers has seen U.S. stock indexes hit record highs, world government bond yields have dropped, the Euro currency has rallied to a 14-month high, and the U.S. dollar index has hit a 13-month low. Gold has also seen a decent rally the past couple weeks.
In overnight news, a poll of Euro zone forecasters predicted a 1.5% annual inflation rate for the Euro zone, which is well below the 2.0% annual inflation target the ECB wants.
The important “outside markets” on Friday morning see Nymex crude oil futures slightly higher and trading above $47.00 a barrel. Recent upside price action suggests a market bottom is in place for oil. However, my bias is that crude oil prices will remain trapped in a choppy and sideways trading range between $40 and $50 a barrel in the coming months. Meantime, the U.S. dollar index is lower and hit a 13-month low overnight. The greenback bears remain in firm near-term technical command as prices have been trending lower since the beginning of this year.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly lower in early U.S. trading. Prices Thursday hit a contract and record high. The bulls have the solid 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 and 18-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 the contract high of 2,476.25 and then at 2,490.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,457.75 and then at this week’s low of 2,448.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index September futures: Prices are weaker in early U.S. trading today. Prices Thursday hit a record high. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the contract high of 5,938.50 and then at 5,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,900.00 and then at 5,889.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are higher and hit a three-week high in early U.S. trading. Bulls are having a very good week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 155 even and then at 155 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 154 even and then at 153 20/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher and hit a three-week high 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at 126.12.0 and then at 126.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 126.00.0 and then at 125.21.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is lower and hit a 13-month low in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 94.170 and then at 94.500. Shorter-term support is seen at the overnight low of 93.830 and then at 93.500. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
September Nymex crude oil prices are lower in early U.S. trading, on profit taking from recent good gains. It still appears a near-term market bottom is in place. Look for buy stops to reside just above technical resistance at this week’s high of $47.74 and then at $48.00. Look for sell stops just below technical support at $46.00 and then at $45.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were steady to lower overnight—corn and soybeans lower and wheat steady. A serious weather market is at work in the grains. Some spotty rains overnight have the corn and soybean markets weaker. However, the extended weather forecasts still do not look promising for any significant rains in the Corn Belt. That will continue to limit selling interest in the grains.