Friday, September 2–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion remains elevated late this week. Major Covid lockdowns in China continue to crimp the world’s second-largest economy, which only adds to fears of a global economic recession, as major central banks, excluding China’s, are tightening their monetary policies to battle problematic price inflation, but in the process are slowing their economies.
In overnight news, the Euro zone producer price index for August came in at up 4.0% from July and up 37.9%, year-on-year. One might surmise those numbers as stunning, but they are similar to recent Euro zone PPI monthly reports. Soaring energy costs in Europe are behind the huge inflation numbers.
Traders are awaiting Friday morning’s U.S. employment situation report from the Labor Department. That report is expected to show the key non-farm payrolls growth number at up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs. Ironically, a stronger-than-expected rise in non-farm payrolls may be deemed bearish for the stock market, as traders might interpret a strong jobs number as meaning the Federal Reserve will get even more aggressive on its monetary policy tightening.
The key outside markets today see Nymex crude oil prices higher and trading around $88.50 a barrel. Energy traders are awaiting the OPEC-plus meeting next Monday, at which time the cartel will likely discuss cutting its collective crude oil production. The U.S. dollar index is lower in early U.S. trading, on a corrective pullback after hitting a 20-year high on Thursday. The yield on the 10-year U.S. Treasury note is fetching 3.263%. The 2-year U.S. Treasury note yield this week hit a 15-year high and is presently trading at 3.503%.
Other U.S. economic data due for release Friday includes manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 Wednesday’s high of 4,035.00 and then at at this week’s high of 4,089.50. Support for active traders is seen at this week’s low of 3,920.00 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are a bit weaker in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 12,500.00 and then at Wednesday’s high of 12,578.75. On the downside, shorter-term support is seen at this week’s low of 12,091.00 and then at 12,000.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are slightly up in early U.S. trading. Prices are in a four-week-old downtrend on the daily bar chart and bears have the advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Thursday’s high of 135 4/32 and then at 136 even. Shorter-term support lies at this week’s low of 133 4/32 and the at 132 even. Wyckoff’s Intra-Day Market Rating: 5.0
December U.S. T-Notes: Prices are firmer in early U.S. trading. Prices are in a four-week-old downtrend on the daily bar chart and bears have the technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Thursday’s high of 116.17.5 and then at 117.00.0. Shorter-term technical support lies at this week’s low of 115.23.0 and then at 115.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are higher in early U.S. trading, on short covering. Bears still have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.0169 and then at 1.0200. Shorter-term support is seen at the contract low of .9984 and then at .9900. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at Thursday’s high of $89.63 and then at $91.00. Look for sell stops just below technical support at $86.50 and then at the August low of $85.37. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures were firmer overnight, on corrective bounces from this week’s selling pressure. Recently dropping crude oil and other raw commodity prices and keener risk aversion are bearish for the grain markets. Look for grain traders to take daily price direction from daily price movements in the crude oil market.
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