Friday, June 14–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly lower overnight, on keener risk aversion among traders and investors. The U.S. stock indexes are also pointed toward modestly lower openings when the New York day session begins.
The marketplace is on edge following the U.S. blaming Iran for two more ships in the Persian Gulf area (this time in the Gulf of Oman) being attacked by either smaller gunboats, mines or possibly even a torpedo. The U.S. military has a video showing what is apparently a small Iranian gunboat next to one of the big ships that was attacked. U.S. Secretary of State Mike Pompeo said Iran’s attacks are a “clear and present threat to international peace and security.” U.S. Navy ships are reportedly protecting some oil tankers in the region. This situation could escalate rapidly if Iran and the U.S. have a direct military confrontation.
Markets were also spooked by news Friday that China’s industrial production was at its slowest growth pace in 17 years in May, at up 5%, year-on-year, and below market expectations of 5.5% growth. The world’s number-two economy has been showing signs of weakening for months, amid a major trade war with the U.S.
Gold prices pushed to a 14-month high today on safe-haven demand, while U.S. Treasuries are also seeing their yields drop significantly.
In other overnight news, the Russian central bank cut its main interest rate to 7.5%, in the latest move by the world’s central banks to ease their monetary policies amid slowing global economic growth and very low inflationary pressures.
The key “outside markets” today see Nymex crude oil prices weaker and trading around $52.00 a barrel. Worldwide supply and demand fundamentals for crude oil favor the bears. Meantime, the U.S. dollar index is slightly up in early U.S. trading.
U.S. economic data due for release Friday includes retail sales, industrial production and capacity utilization, manufacturing and trade inventories and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the firm overall near-term technical advantage. 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 bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,915.75 and then at 2,930.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,871.50 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower in early U.S. trading. Bulls still have the firm 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,547.25 and then at this week’s high of 7,626.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,446.25 and then at 7,400.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading, on safe-haven demand. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 155 1/32 and then at 155 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 3/32 and then at 153 20/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher and hit a contract high in early U.S. trading. 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 bullish early today. Shorter-term support lies at the overnight low of 127.09.5 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight contract high of 127.21.0 and then at 127.24.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer 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 above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.695 and then at 96.925. Shorter-term support is seen at 96.345 and then at this week’s low of 96.035. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are weaker in early U.S. trading. Bears are still in near-term technical control. A price downtrend is in place on the daily chart. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $52.70 and then at $53.45. Look for sell stops just below technical support at $52.00 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures prices were firmer again overnight, with corn up 3 to 5 cents, soybeans up around 3 cents and wheat 1 to 2 cents higher. Grain traders do not want to go home short the futures on a Friday afternoon during a serious weather market in the grains. Weather forecasts for the U.S. Midwest in the coming days call for wetter and cooler conditions, which is not beneficial for the newly planted corn and soybean crops, or for farmers who have yet to get their wet fields seeded. Cash corn and soybean basis levels have also narrowed (firmed up) to suggest commercial end-users are starting to get just a bit concerned about future supplies. Look for the big, speculative “fund” futures traders who had been short the grains to continue to unwind their losing bets, to push grain futures prices higher. Also, the funds are likely to be now adding new long positions in the grains as the chart postures for those markets now look more bullish.
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