Thursday, July 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global stock markets were mostly firmer overnight in the wake of a U.S. Federal Reserve meeting that produced a statement most of the markets deemed as leaning to the dovish side of U.S. monetary policy. Recent corporate earnings reports have also been mostly upbeat. U.S. stock indexes are pointed toward higher and record high openings when the New York day session begins.
Gold is posting solid gains Thursday in the wake of the dovish Fed statement that pushed the U.S. dollar index to a 13-month low. Reports overnight said India is moving to make “paper” gold (such as sovereign gold bonds) more attractive to its domestic investors, in order to reduce demand for actual gold bullion.
Traders and investors have mostly digested the Federal Reserve’s Open Market Committee meeting (FOMC) that ended Wednesday afternoon. The Fed did not change U.S. interest rates or monetary policy. No changes were expected. The statement did say the Fed is looking to soon change its policy on its big balance sheet of U.S. securities. That suggested the Fed wants to shrink it sooner rather than later. The marketplace did not perceive the Fed statement to be leaning toward the hawkish side of U.S. monetary policy mainly because many Fed watchers feel the Fed won’t raise interest rates until December, if even then. Fed watchers also think the Fed is starting to worry more about deflationary price pressures creeping back into world economies.
The marketplace is now looking ahead to the U.S. second-quarter advance gross domestic product (GDP) report, due out on Friday morning. Forecasts are calling for that number to come in at up 2.7%, year-on-year versus the first-quarter reading of up 1.4%.
The U.S. dollar index sold off following the FOMC statement, and is seeing follow-through selling pressure Thursday. The Euro currency, meantime, rose to a nearly two-year high overnight. The Euro has been in a strong price uptrend since early April.
The other “outside market” on Thursday morning sees Nymex crude oil futures slightly firmer and hitting a six-week high overnight. Crude prices are in a five-week-old uptrend and bulls are eyeing pushing the market above the key $50.00 level soon.
U.S. economic data due for release Thursday includes the weekly jobless claims report, durable goods orders, the Chicago Fed national activity index, the Kansas City Fed manufacturing survey, and the advance economic indicators report.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are higher and hit a contract and record high in early U.S. trading. The bulls have the solid 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 bullish early today. Today, shorter-term technical resistance comes in at 2,490.00 and then at 2,500.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,463.50 and then at last week’s low of 2,448.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index September futures: Prices are slightly higher in early U.S. trading today and hit another record high. 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 the overnight contract high of 5,987.50 and then at 6,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,961.00 and then at Wednesday’s low of 5,927.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are weaker in early U.S. trading. Trading has turned choppy this week. Bulls still have the overall near-term technical advantage, but have faded a bit. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 153 13/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at 152 18/32 and then at this week’s low of 152 8/32. 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. Trading has been choppy this week. 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 resistance lies at the overnight high of 126.01.5 and then at 126.06.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.25.0 and then at 125.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady and did hit a 13-month low overnight. Bears have the solid overall near-term technical advantage. 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 to bearish early today. The dollar index finds shorter-term technical resistance at 93.800 and then at this week’s high of 94.115. Shorter-term support is seen at the overnight low of 93.000 and then at 92.750. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly firmer in early U.S. trading and poked to a six-week high overnight. Prices have been trending higher for five weeks. It appears a near-term market bottom is in place. Look for buy stops to reside just above technical resistance at $49.00 and then at $50.00. Look for sell stops just below technical support at $48.50 and then at $48.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were firmer overnight, on corrective bounces following this week’s strong losses. While some decent rainfall has occurred over much of the U.S. Corn Belt this week, there is still not much rain in the extended forecast for the region—even though temps will moderate. Traders will examine this morning’s weekly USDA export sales report.