Wednesday, June 19–Jim Wyckoff’s Morning Markets Report
European stock indexes were mostly weaker overnight, while Asian shares were mostly up. Asian investors were encouraged by a tweet from President Trump on Tuesday that said he and Chinese President Xi had a good telephone conversation and they will meet at next week’s G-20 conference in Japan. The U.S. stock indexes are pointed toward steady to slightly lower openings when the New York day session begins, following strong gains Tuesday that put the bulls back in good shape to challenge or even surpass this year’s record highs.
Focus of the marketplace at mid-weekl is squarely on the Federal Open Market Committee (FOMC) meeting that began Tuesday morning ends this afternoon with a statement. The majority of Fed watchers believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. However, a few do think the Fed will move to lower U.S. interest rates today. Look for more active trading in many markets in the immediate aftermath of the 2:00 p.m. EDT FOMC statement.
The Bank of England and Bank of Japan also hold their regular monetary policy meetings this week.
Geopolitics is still not far from the front burner of the marketplace. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation could very quickly escalate and is not just going to fade away.
The key “outside markets” today see Nymex crude oil prices near steady and trading just below $54.00 a barrel. Meantime, the U.S. dollar index is a bit weaker on a corrective pullback from recent good gains.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage to suggest more upside. 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 to bullish early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 2,936.50 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,900.00 and then at this week’s low of 2,889.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are slightly higher in early U.S. trading. 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 and 18-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 Tuesday’s high of 7,721.75 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,650.00 and then at 7,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower on profit taking after hitting a contract high Tuesday. Bulls 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 bearish early today. Shorter-term technical resistance is seen at the overnight contract high of 155 5/32 and then at the contract high of 155 30/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 154 even 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 lower on profit taking after hitting a contract high Tuesday. Bulls 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 bearish early today. Shorter-term support lies at this week’s low of 127.03.0 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.18.0 and then at the contract high of 127.29.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading, on a corrective pullback from recent good gains. 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 above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.265 and then at 97.500. Shorter-term support is seen at this week’s low of 96.820 and then at 96.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are near steady in early U.S. trading. Bears still have the overall near-term technical advantage but a price downtrend that is still in place on the daily chart is now in jeopardy. The shorter-term moving averages 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 (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 $54.38 and then at $55.00. Look for sell stops just below technical support at $53.00 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures prices were lower overnight, with corn down 3 to 4 cents, soybeans off around 3 cents and wheat down 8 to 9 cents. There is some more normal profit taking from recent gains from the shorter-term futures traders, was well as normal downside corrections in near-term price uptrends. Weather is still overall bullish for the grains. Wetter and cooler than normal conditions are forecast for much of the U.S. Midwest for the next week. It’s well past mid-June and planting corn or soybeans this late is now not an option for most farmers whose fields have yet to be seeded. Selling pressure at mid-week will be limited by a tweet from President Trump on Tuesday that said he and Chinese President Xi had a good telephone conversation and they will meet at next week’s G-20 conference in Japan. A U.S.-China trade agreement would be bullish for all U.S. ag markets. Focus is turning to the June 28 USDA U.S. planted acreage report. Grain analysts are saying it’s wide open on the numbers the Agriculture Department assigns to corn and soybean planted acres. This makes the report a big unknown and likely to really gyrate the grain futures markets in the immediate aftermath of its release. Corn and soybean prices could either trade sharply higher or sharply lower on the acreage numbers.
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