Thursday, August 8–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly up overnight, on some upbeat economic data coming out of China. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The world marketplace has calmed down Thursday, after some keener anxiety early Wednesday. Price action the past two days hints the U.S. stock index bears may now be exhausted, which begins to suggest near-term market bottoms are in place. Still, price action today and Friday will be extra important.
China’s exports rebounded in July, rising 3.3%, year-on-year, and compares to a 1.3% decline reported for June. China’s exports in July were expected down 2.0%. Meantime, China’s July imports were down 5.6%, year-on-year.
The yield on the benchmark U.S. Treasury note rose to 1.729% this morning, after dropping to around 1.61% earlier this week.
China’s central bank on Thursday set its currency, the yuan, exchange rate with the U.S. dollar at 7.0039. That’s the weakest yuan fixing set by the central bank in 11 years, and is above the 7 level that the U.S. has ostensibly deemed problematic. This exchange rate will continue to be closely monitored. The U.S. designated China as a currency manipulator earlier this week.
The key “outside markets” today see Nymex crude oil prices higher and trading around $52.25 a barrel. The U.S. dollar index is trading slightly higher in early U.S. action.
U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade and the monthly retail chain stores sales index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly up and have rebounded after hitting a two-month low Tuesday. Bears appear to be exhausted now, hinting at a near-term bottom in place. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bullish early today. Today, shorter-term technical resistance comes in at 2,900.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,870.50 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are modestly higher and have rebounded from a two-month low hit Tuesday. Bears now appear exhausted. Shorter-term moving averages (4- 9-and 18-day) are still 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,611.00 and then at 7,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,526.00 and then at 7,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the overall near-term technical advantage but appear exhausted now. Shorter-term moving averages (4- 9- 18-day) are still 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 161 26/32 and then at 162 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 24/32 and then 160 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage but may be exhausted now. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above with 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 129.20.5 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at 130.10.5. 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 up in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above 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 97.565 and then at this week’s high of 97.930. Shorter-term support is seen at this week’s low of 96.980 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading, on a corrective bounce from recent strong selling pressure. Prices Wednesday hit a new low for the year. Bears have the overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $52.84 and then at $53.00. Look for sell stops just below technical support at $51.00 and then at Wednesday’s low of $50.52. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were higher in overnight trading, on some short covering and corrective chart consolidation. Corn was up 2 to 3 cents, soybeans 5 to 6 cents higher and wheat up 2 to 4 cents.
Traders will closely examine this morning’s weekly USDA export sales report. Recent U.S. export data has shown tepid worldwide demand.
Trading action in the US grain futures markets is likely to be choppy and sideways until Monday’s key USDA monthly supply and demand report, which will include estimates of the size of the US and world crops and the updated US corn-soybean acreage mix that is so much in question at present. Look for very active trading in the grains Monday, in the aftermath of the important USDA report.
The escalating US-China trade war continues to be a bearish weight for the US grain markets. However, traders may now have factored into futures prices most of the bearishness of the matter—at least for now.
Weather in the US Corn Belt remains mostly benign to the US corn and soybean crops, but a bit dry in some areas. The extended weather forecasts out to the middle of August are non-threatening. It appears the next weather threat to the corn and soybean crops would be an early frost, which some weather forecasters say is a higher probability this year.
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