Thursday, July 11–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly higher overnight. U.S. stock indexes are at record highs and are pointed toward firmer openings when the New York day session begins.
The marketplace is still basking in the easy-money limelight cast by Federal Reserve Chairman Jerome Powell on Wednesday. In is his speech to House lawmakers he said since the June FOMC meeting uncertainties, including world trade tensions, global growth and very low inflation, continue to cloud the outlook for the U.S. economy and these matters are not improving. He said the U.S. economic outlook is solid, but the prospects for other major world economies are worrisome. The marketplace read his remarks as fully dovish on U.S. monetary policy, which in turn strongly suggests the Fed will cut U.S. interest rates as soon as this month. That’s a bullish scenario for U.S. Treasuries, the U.S. stock market, and commodities markets, including the precious metals. However, it was a bearish development for the U.S. dollar on the foreign exchange market. Powell speaks to a U.S. Senate panel today.
Gold prices are solidly higher today on the easy-money Fed and also on fresh safe-haven demand. Reports said a British warship had to step in and rescue a U.K. oil tanker that was being harassed by three Iranian vessels in the Strait of Hormuz.
In overnight news, the Bank of England said the risk of a “no deal” on Brexit has hurt the U.K. economy.
The key “outside markets” today see Nymex crude oil prices higher and trading just below $61.00 a barrel. The U.S. dollar index is lower early today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the monthly USDA supply and demand report, real earnings, the consumer price index, the monthly Treasury budget statement, and the monthly chain store sales index. Several Federal Reserve officials are also scheduled to make speeches today.
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer and near Wednesday’s contract and record high. Bulls have the solid overall near-term technical advantage. There are still no early chart clues of a market top being close at hand. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,007.50 and then at 3,025.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,963.50 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher and hit a contract and record high overnight. 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 7,963.25 and then at 8,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at Wednesday’s low of 7,811.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Surprisingly, bonds and notes have not seen fresh upside in prices after Fed Chair Powell’s dovish comments Wednesday. Bulls still have the overall near-term technical advantage but are fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 155 3/32 and then at this week’s high of 155 22/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 153 29/32 and then at 153 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 near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. 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 to bearish early today. Shorter-term support lies at 127.05.0 and then at this week’s low of 126.27.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 127.23.5 and then at 127.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is lower in early U.S. trading. Bears have gained downside momentum late this week amid the easy-money Fed. The shorter-term moving averages for the dollar index are still bullish early today, as the 4-day is above 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 96.695 and then at 97.000. Shorter-term support is seen at the overnight low of 96.455 and then at 96.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
August Nymex crude oil prices are higher and hit a six-week high in early U.S. trading. Bulls have the overall near-term technical advantage and have gained power late this week. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $61.00 and then at $62.00. Look for sell stops just below technical support at $60.00 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. grain futures prices were mixed in overnight trading. Corn was down 1 to 2 cents, with soybeans and wheat near steady.
Look for quieter trading action early Thursday, ahead of the late-morning release of the latest USDA supply and demand report. Trading action will pick up significantly after that. Traders surveyed by Reuters expect USDA to lower its U.S. corn crop production estimate to 13.664 billion bushels from its June forecast of 13.680 billion bushels. The agency is expected cut the size of this year’s U.S. soybean crop to 3.833 billion bushels from 4.150 billion bushels estimated in June, due to the smaller U.S. acreage estimate USDA released in late June. There is some keener uncertainty regarding USDA’s numbers for corn and soybeans in this report, given the historically late-planting of the crops and questions about the corn-soybean acreage mix. For U.S. all wheat carryover, the trade expects just over 1 billion bushels of stocks for both the current marketing year and the new marketing year.
Warmer, drier weather in the Midwest recently has been bearish for the grain futures markets. Focus now is on a
tropical storm brewing in the Gulf of Mexico that is likely to impact weather in the central U.S. next week. Presently, ideas are mixed on whether the storm will bring needed rains to the eastern U.S. Corn Belt. Come next Monday morning, if the Midwest weather forecasts are calling for hot and dry conditions, grain futures market bulls will come roaring back with a vengeance.
Traders will also closely examine Thursday morning’s weekly USDA export sales report, specifically looking for new business from China. China has promised to buy more U.S. ag products but so far little business from that nation has showed up in USDA export sales reports.
One bullish underlying element for the U.S. grain markets late this week is the easy-leaning Federal Reserve and the resulting weakening of the U.S. dollar. More money in the U.S. financial system likely means more demand for raw commodities, while the weaker greenback makes U.S. commodities that are priced in dollars on the world markets cheaper to purchase in non-U.S. currency.
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.