Friday, August 30–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, following strong gains posted Thursday. Risk appetite has increased late this week on notions the U.S.-China trade war may have ratcheted down a bit after reports surfaced out of China Thursday that the nation says it is not interested in escalating the trade war with the U.S. and that both countries are still in communication on the matter. Still, new U.S. tariffs on China kick in on Sunday.
In overnight news, the Euro zone consumer price index for August came in at up 1.0%, year-on-year, which was in line with market expectations but still underscores the very low and even problematic inflation currently in place for most of the world’s major economies.
The key “outside markets” today see Nymex crude oil prices down and trading around $56.00 a barrel. The U.S. dollar index is slightly firmer.
Today is the last trading day of the week and of the month. That makes it an extra important trading day from a charts perspective. Weekly or monthly high or low closes are significant technical signals.
U.S. economic data due for release Friday includes personal income and outlays, the ISM Chicago business survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit a four-week high in early U.S. trading. Bulls have gained the overall near-term technical advantage as prices have pushed above the recent choppy trading range. 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 bullish early today. Today, shorter-term technical resistance comes in at 2,970.00 and then at 3,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,921.00 and then at 2,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are higher in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at 7,800.00 and then at 7,850.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,707.75 and then at 7,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are weaker in early U.S. trading, on normal profit taking from recent gains. 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 technical resistance is seen at the overnight high of 165 22/32 and then at 166 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 164 14/32 and then at this week’s low of 164 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are weaker in early U.S. trading. 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 131.13.0 and then at 131.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 131.26.0 and then at 132.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly higher in early U.S. trading and hit a four-week high overnight. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the contract high of 98.225 and then at 98.500. Shorter-term support is seen at Thursday’s low of 97.685 and then at 97.505. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are weaker in early U.S. trading. Bears have the slight overall near-term technical advantage amid a six-week-old price downtrend still in place on the daily bar chart, but now just barely. 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 neutral early today. Look for buy stops to reside just above technical resistance at this week’s high of $56.89 and then at $57.13. Look for sell stops just below technical support at $55.50 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed in overnight trading. Corn was up 2 to 3 cents, soybeans up around 7 cents and wheat steady to off 5 cents. The corn market is seeing some support from a move by the Trump administration to boost corn ethanol usage—a move to assuage farmers who have been hurt badly by the U.S.-China trade war. Grain traders have not reacted much to the late-week ratcheting down in trade tensions between the world’s two largest economies. Grain traders are more interested in actions than in words. Cooler weather forecasts for the Corn Belt in the next week and some longer-term forecasts for an early frost in the region may be limiting selling pressure in the grains heading into the long holiday weekend. An early frost would be especially damaging to the late-planted corn and soybean crops.
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