Friday, September 6–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite has markedly improved this week, which has pushed the U.S. stock indexes back toward their summertime highs.
The August U.S. employment situation report from the Labor Department is on deck Friday morning. The key “non-farm” payrolls component of the report is expected to show a gain of 150,000 in August. A miss on the consensus forecast is likely to move many markets.
Protesters are set to demonstrate in Hong Kong again this weekend, reports said. This week Hong Kong’s leader withdrew from consideration a proposed law that would have allowed the extradition of Hong Kong citizens to mainland China for criminal trials. Right now it appears doubtful the reversal of Hong Kong’s leader on the extradition matter will be enough to stop the civil unrest. Now, protesters are calling for more change, including Hong Kong’s leader stepping down. Importantly, the Fitch credit rating agency has just downgraded its main rating on Hong Kong.
The Brexit saga continues as the October deadline for a U.K. deal with the European Union approaches. Prime Minister Boris Johnson wants out with no extension of time to reach a “soft” Brexit. He said Thursday he’d “rather be dead in a ditch” than extend Brexit negotiations. However, votes this week from Parliament appear to have defeated his “hard” Brexit stance. The matter continues to unsettle European markets.
China’s central bank moved to again ease its monetary policy Friday by lowering the reserve requirement ratio for banks.
The Euro zone second-quarter GDP on Friday came in unrevised at up 0.2% from the first quarter, and was up 1.2%, year-on-year.
The key “outside markets” today see Nymex crude oil prices weaker and trading around $55.75 a barrel. The U.S. dollar index is firmer today.
There is no other U.S. economic data due for release Friday. Federal Reserve Chairman Jerome Powell does deliver a speech in Zurich, Switzerland later Friday.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage after a bullish upside “breakout” from the choppy trading range on the daily bar chart occurred this week. 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 this week’s high of 2,987.50 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 2,972.25 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are firmer and hit a five-week high in early U.S. trading. Bulls have the firm overall technical advantage amid a bullish upside “breakout” this week from the choppy trading range. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,910.00 and then at 7,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,800.00 and then at Thursday’s low of 7,736.00. 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 slightly lower in early U.S. trading. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 high of 164 9/32 and then at 165 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 163 6/32 and then at 163 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 the overnight low of 130.31.5 and then at 130.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 131.12.0 and then at 131.20.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer in early U.S. trading. Bulls still have the firm 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 early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 98.070 and then at Wednesday’s high of 98.490. Shorter-term support is seen at this week’s low of 97.580 and then at 97.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. A seven-week-old price downtrend on the daily bar chart has been negated. The shorter-term moving averages are neutral early today as the 4-day is even with the 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $56.00 and then at the overnight high of $56.52. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mixed in overnight trading. Corn was up around 1 cent, soybeans up about 4 cents and wheat down 1 to 2 cents. The highlight of the week for the grain markets is the Friday morning weekly USDA export sales report, which was delayed by one day due to the U.S. holiday on Monday. The grain market bulls are looking for a fresh spark to ignite price rallies, but market fundamentals remain firmly bearish. The start of the US soybean and corn harvests in the coming weeks will provide more evidence of the size of this year’s crops. Next Friday’s USDA monthly supply and demand report will also give updates on the size of the US crops. Weather in the Midwest continues to be benign, which is bearish. Also bearish is the strong US dollar on the foreign exchange market. The U.S. dollar index has backed off late this week after hitting a 27-month high on Tuesday.
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