Friday, August 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
The economic highlight of the week occurs Friday morning at 10:00 a.m. EDT when Federal Reserve Chairman Jerome Powell is scheduled to give a speech at the Kansas City Fed’s symposium in Jackson Hole, Wyoming. The Fed was deemed by the marketplace to be leaning significantly easy on their monetary policy, until late this week. Comments from Fed officials at the Jackson Hole confab appear to be walking back notions the Fed will embark on a series of interest rate cuts in the coming months. Traders hope Powell will provide more clarity on the Fed’s monetary policy intentions.
Traders and investors are wondering how the weekend will turn out, regarding civil unrest in Hong Kong. An escalation in the situation would significantly impact markets and prompt risk aversion early next week. So far this week, risk aversion has receded from levels seen the past couple weeks.
There is also a Group of Seven meeting in France over the weekend.
The key “outside markets” today see Nymex crude oil prices slightly lower and trading around $55.25 a barrel. The U.S. dollar index is higher and at a new high for the week.
U.S. economic data due for release Friday includes new residential sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below 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 this week’s high of 2,941.50 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,920.00 and then at 2,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are higher in early U.S. trading. 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 high of 7,777.00 and then at 7,805.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,734.00 and then at 7,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower in early U.S. trading on profit taking. 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 even with 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 163 10/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 6/32 and then at 162 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
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 130.16.0 and then at 130.10.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.31.0 and then at 131.11.5. 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 higher and hit a three-week high in early U.S. trading. Bulls have the solid 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 and 18-day. The 9-day is above 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 98.000 and then at the August high of 98.225. Shorter-term support is seen at the overnight low of 97.690 and then at this week’s low of 97.545. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are near steady in early U.S. trading. Bears have the slight overall near-term technical advantage amid a five-week-old price downtrend still in place on the daily bar chart—but now just barely. 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 bearish early today. Look for buy stops to reside just above technical resistance at $56.00 and then at Thursday’s high of $56.46. Look for sell stops just below technical support at this week’s low of $54.79 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were narrowly mixed in overnight trading. Corn was down around 2 cents, soybeans up about 2 cents and wheat steady to 1 cent up. The focus of the US grain markets this week is the annual Pro Farmer Midwest crop tour that ended Thursday. The Pro Farmer Midwest Crop Tour released results from the states of Iowa and Minnesota last night. In Iowa, the tour found an average corn yield of 182.83 bu. per acre, which compares to 188.20 bu. per acre last year and a three-year average of 185.39 bu. per acre. Soybean pod counts in a 3-feet by 3-feet square came in at 1,106.91, which compares to 1,208.99 pods last year and the three-year average of 1175.40 pods. In Minnesota, scouts measured an average yield potential of 170.37 bu. per acre, which compares to 178.67 bu. per acre last year and a three-year average of 184.18 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 965.31, which compares to 1,090.47 for the state last year and 1,072.68 pods for the three-year average. At 1:30 p.m. central time today will be the release Pro Farmer’s final corn and soybean crop and yield estimates. Generally, the results from this year’s crop tour came in a little better than traders expected. While Corn Belt weather conditions are not threatening to the corn and soybean crops at present, extended forecasts are calling for a cooler September. The late-planted corn and soybean crops need a warm September to get to full maturity. The grain market bulls’ last hope for a weather rally would be an early frost in September.
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