Wednesday, June 26–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins.
The markets were just slightly rattled Tuesday afternoon when Federal Reserve Chairman Jerome Powell said the Fed will not be pressured into cutting U.S. interest rates without the economic data to back any cut. U.S. stocks backed off a bit on Powell’s remarks.
A main focus of the marketplace at mid-week is the late-week meeting between U.S. President Trump and Chinese President Xi in Japan at the G20 confab—possibly after all the markets are closed on Friday. The two will discuss their ongoing trade war. The outcome of that meeting is uncertain and could have major implications for many markets. As has been the case since the trade war began, there are conflicting comments coming from the U.S. side. Reports attributed to U.S. trade officials Tuesday played down any significant progress to be expected at the summit meeting, other than a pledge that both sides will keep talking. The U.S. stock markets has somewhat reacted positively Wednesday morning to a comment from U.S. Treasury Secretary Mnuchin today, saying a U.S.-China trade deal is “90 percent done.”
The Iran-U.S. confrontation has turned to a war of words this week. Both sides are tossing harsh rhetoric at each other. This situation is bullish for safe-haven gold and for crude oil, and is not likely to de-escalate any time soon.
In other news, Bitcoin is posting gains of over $1,000 today and trading around $12,500. Part of the buying in the crypto currency is tied to the recent news that FaceBook is launching its own digital currency.
The key “outside markets” today see Nymex crude oil prices higher, at a four-week high, and trading around $58.85 a barrel. Meantime, the U.S. dollar index is firmer on a corrective bounce after hitting a three-month low Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, advance economic indicators and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading today. Bulls have the solid overall near-term technical advantage to suggest still more upside. But if prices see stronger selling pressure the rest of this week then a big and bearish double-top reversal pattern on the daily bar chart could be developing. 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 early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 2,958.25 and then at the contract high of 2,969.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,917.50 and then at 2,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are 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 early today. Shorter-term technical resistance is seen at 7,779.50 and then at last week’s high of 7,821.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,609.50 and then at 7,550.00. 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 in early U.S. trading, on profit taking. Bulls still 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 156 1/32 and then at the contract high of 156 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 154 17/32 and then at 154 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, on profit taking. 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 early today. Shorter-term support lies at the overnight low of 127.24.0 and then at this week’s low of 127.17.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 128.00.0 and then at the contract high of 128.08.5. 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 on a correction after hitting a three-month low Tuesday. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 95.875 and then at 96.000. Shorter-term support is seen at this week’s low of 95.365 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
August Nymex crude oil prices are higher and hit a four-week high in early U.S. trading. Bulls have some momentum to suggest more upside in the near term. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $59.13 and then at $60.00. Look for sell stops just below technical support at $58.00 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were weaker overnight, on normal downside corrections in existing price uptrends and as the markets pause ahead of a very important data set being released from USDA late Friday morning. Corn is down around 3 cents, soybeans off around 3 cents and wheat 3 to 4 cents lower. The grain markets are likely to be subdued until the release Friday of updated U.S. acreage and quarterly grain stocks reports from the Agriculture Department. Forecasts for U.S. corn seedings are for around 86.5 million acres compared to 92.792 million acres in the March USDA forecast. Soybean plantings are forecast at around 84.5 million acres compared to 84.617 million acres in USDA’s March forecast. All wheat seedings are forecast around 45.5 million acres compared to 45.754 million acres in USDA’s March estimate. Friday’s acreage report will be one of the most important grain market reports of the year, due to the uncertainty surrounding it. U.S. Corn Belt weather has turned mostly neutral if not a bit bearish for corn and soybeans now. Some drier conditions later this week will benefit the crops. Also late this week the U.S. and Chinese presidents meet to discuss trade. Ideas are widely mixed on the outcome of that meeting, which could have major implications for grain prices. Most are leaning toward the meeting producing not much other than a pledge that both sides will keep talking on the matter.
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