Friday, June 21–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were flat to mixed overnight, pausing from gains seen this week. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, on corrective pullbacks from this week’s solid gains that have prices at or near record highs.
Gold prices today hit new five-year highs above $1,400 on safe-haven demand amid Persian Gulf tensions and the easy money stances of the major central banks of the world.
The U.S.-Iran confrontation in the Persian Gulf region has escalated this week with the shooting down of a U.S. drone by Iran. President Trump has appeared to downplay that situation by saying it the downing of the drone could have been a mistake by Iran’s military. Reports overnight said the U.S. was planning a retaliatory strike, but the mission was called off. The report also said the U.S. strikes against Iran remain on the table. Still, this matter will likely intensify before it fully plays out. Traders in some markets are likely to even up their positions heading into the weekend, on worry U.S. warships or warplanes could attack Iran’s military.
The marketplace is still basking in the easy-money stances taken by the Federal Reserve and European Central Bank this week. Stock markets have rallied, government bond yields have dropped, and so has the U.S. dollar. Commodities have been given a shot of adrenalin on ideas more money in world financial system will mean more consumer demand for commodities.
In overnight news, the Euro zone composite purchasing managers index (PMI) came in at 52.1 in June, which was better than the expectations of 51.8. A reading above 50.0 suggests expansion. However, the German manufacturing PMI came in at 45.4. That’s a downbeat reading coming from the Euro zone’s main economic workhorse, Germany, and is a worrisome factor for Euro zone economic conditions in the coming months.
The key “outside markets” today see Nymex crude oil prices higher and trading just at $57.65 a barrel. Meantime, the U.S. dollar index is slightly lower as the greenback bulls are in trouble after this week’s drubbing of the USDX.
U.S. economic data due for release Friday includes the U.S. flash manufacturing PMI, the services PMI, existing home sales, and the Federal Reserve releases stress test results from U.S. banks.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly down in early U.S. trading and very close to this year’s high. Bulls have the solid overall near-term technical advantage to suggest still more upside, including new highs. 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 early today. Today, shorter-term technical resistance comes in at the contract high of 2,967.75 and then at 2,985.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 2,930.50 and then at Wednesday’s low of 2,915.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are a bit weaker in early U.S. trading and not far below this year’s high. Bulls have the solid overall near-term technical advantage to suggest still more upside. 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 early today. Shorter-term technical resistance is seen at the overnight high of 7,770.75 and then at this week’s high of 7,821.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 7,692.75 and then at 7,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower on profit taking after hitting a contract high Thursday. Bulls still have the solid overall near-term technical advantage to suggest more upside. 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 early today. Shorter-term technical resistance is seen at 156 even and then at the contract high of 156 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 even and then at 154 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are lower on profit taking after hitting a contract high Thursday. 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 support lies at the overnight low of 127.17.5 and then at 127.12.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 128.00.5 and then at the contract high of 128.08.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. Bulls have faded fast this week. 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 neutral to bearish early today. The dollar index finds shorter-term technical resistance at 96.500 and then at Thursday’s high of 96.705. Shorter-term support is seen at the overnight low of 95.995 and then at the June low of 96.890. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are higher and hit another three-week high overnight. Bulls have gained good upside momentum this week. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $58.00 and then at $59.00. Look for sell stops just below technical support at $57.00 and then at the overnight low of $56.66. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were mixed overnight, with corn steady to up 1 cent, soybeans off around 3 cents and wheat near steady. Gains in corn, wheat and soybeans on Thursday put the bulls back on track, amid near-term price uptrends in place on the daily bar charts. U.S. Corn Belt weather still favors the bulls. Rainy and stormy conditions are forecast for the U.S. Midwest the rest of this week and into next week. Focus has turned to the June 28 USDA U.S. planted acreage report. That report will be one of the most important grain market reports of the year. Grain analysts are saying it’s wide open on the numbers the Agriculture Department assigns to corn and soybean planted acres. That means price action will likely be subdued next week, ahead of the Friday report. However, next Friday’s price action in the grains is expected to be highly volatile. Late next week is also when the U.S. and Chinese presidents meet to discuss trade. Ideas are also widely mixed on the outcome of that meeting, which also argues for more subdued trade in the grains until late next week.
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