Wednesday, July 10–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker in more subdued trading overnight. U.S. stock indexes are pointed toward moderately lower openings when the New York day session begins.
The U.S. economic highlight of this week will be Fed Chairman Jerome Powell speaking to the U.S. House of Representatives on U.S. monetary policy on Wednesday morning. He follows that up with testimony to a Senate panel on Thursday. Powell is expected to lean slightly toward the dovish side of money policy, and he will surely be asked by lawmakers what he thinks about President Trump bashing him recently, including pondering firing him. Powell may also shed some light on when the next U.S. interest rate increase is coming.
In overnight news, China’s June consumer price index was reported up 2.7%, year-on-year, which was in line with market expectations. However, the food prices component of the report rose by 8.3% annually.
The key “outside markets” today see Nymex crude oil prices higher and trading around $59.00 a barrel. The U.S. dollar index is slightly lower.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, monthly wholesale trade and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker on more mild profit taking after hitting a contract and record high last week. Bulls have the solid overall near-term technical advantage. There are still no early chart clues of a market top being close at hand. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,994.75 and then at the contract high of 3,006.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,955.50 and then at 2,930.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower on more profit taking after hitting a two-month high last week. Bulls still 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. 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 7,869.25 and then at 7,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,743.00 and then at 7,700.00. 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 solidly lower and hit a four-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but are now fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 154 16/32 and then at the overnight high of 155 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 29/32 and then at 153 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
September U.S. T-Notes: Prices are lower and hit a four-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below with the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 126.27.5 and then at 126.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.09.0 and then at 127.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. Bulls still have some upside momentum. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the June high of 97.265 and then at 97.500. Shorter-term support is seen at this week’s low of 96.765 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
August Nymex crude oil prices are solidly higher in early U.S. trading. Bulls have the slight overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above 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 $60.00 and then at the July high of $60.28. Look for sell stops just below technical support at the overnight low of $58.35 and then at this week’s low of $57.30. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures prices were steady to weaker in overnight trading. Corn was down 2 to 3 cents, wheat off around 2 cents and soybeans fractionally weaker.
Look for a quieter day of trading Wednesday as traders await the latest USDA supply and demand report on Thursday. Traders surveyed by Reuters expect USDA to lower its U.S. corn crop production estimate to 13.664 billion bushels from its June forecast of 13.680 billion bushels. The agency is expected cut the size of this year’s U.S. soybean crop to 3.833 billion bushels from 4.150 billion bushels estimated in June, due to the smaller U.S. acreage estimate USDA released in late June. There is some keener uncertainty regarding USDA’s numbers for corn and soybeans in this report, given the historically late-planting of the crops and questions about the corn-soybean acreage mix. For U.S. all wheat carryover, the trade expects just over 1 billion bushels of stocks for both the current marketing year and the new marketing year.
Warmer, drier weather in the Midwest over the past week has helped the development of late-planted U.S. crops. That’s deemed bearish for the grains markets. However, there are some weather forecasters calling for the building of a high-pressure ridge over the Midwest starting next week. That’s far from a certainty, however, as a tropical storm is brewing in the Gulf of Mexico that is likely to impact weather in the central U.S. next week.
Top trade negotiators from Washington and Beijing are speaking this week to revive stalled trade talks, as disagreements over prior commitments and political considerations threaten to bog down discussions. China has made no official mention of a commitment to purchasing more U.S. ag products, and a person with knowledge of the event said Chinese Leader Xi Jinping made no such promise, according to Reuters.
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