Tuesday, July 16–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session beings, and are at or near their record and contract highs. So far this week there have been no major news developments in the world to significantly move markets. Thus, typical lackluster mid-summertime trading has set in. However, a very busy day of U.S. economic data may shake loose the present summertime doldrums.
In overnight news, there was a downbeat economic report coming out of Germany, as the ZEW economic expectations index and current conditions index worsened in July. Germany is the economic workhorse for the European Union.
The key “outside markets” today see Nymex crude oil prices slightly higher and trading around $59.75 a barrel. The U.S. dollar index is higher early today.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, retail sales, import and export prices, industrial production and capacity utilization, the NAHB housing market index, manufacturing and trade inventories, and Treasury international capital data. Several Federal Reserve officials are also slated for speeches today.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage. There are 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 neutral early today. Today, shorter-term technical resistance comes in at the contract high of 3,023.50 and then at 3,035.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 3,000.00 and then at 2,985.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are slightly higher and hit another contract and record high overnight. 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the contract high of 8,001.50 and then at 8,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 7,941.25 and then at 7,900.00. 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 near steady in early U.S. trading. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below 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 154 8/32 and then at 154 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 153 16/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are slightly down in early U.S. trading. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at last week’s low of 126.25.0 and then at 126.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.08.0 and then at 127.12.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is higher in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-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 97.000 and then at the July high of 97.195. Shorter-term support is seen at the overnight low of 96.540 and then at Monday’s low of 96.375. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage amid a price uptrend on the daily chart. The shorter-term moving averages are bullish early today as the 4-day is above 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 last week’s high of $60.94 and then at $62.00. Look for sell stops just below technical support at the overnight low of $59.18 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were lower in overnight trading. Corn was 3 to 5 cents down, soybeans off around 6 cents and wheat around 3 cents lower.
Weather in the U.S. Corn Belt remains the driving force for price action at mid-summer, which is typical for this time of year. While mostly hot and dry weather in the U.S. midsection is in the forecast for this week, some “pop-up” showers are providing relief to dry crops in some areas of the region. Also, a cool front is now expected to move through the Midwest U.S. late in the weekend, likely bringing more substantial rainfall to the area.
Also, Monday afternoon’s USDA Weekly crop progress reports showed the U.S. corn and soybean crops in slightly better condition than traders expected.
Still, temperatures the rest of this week in the Corn Belt will be in the mid- to upper-90s, with even some 100-degree readings. With about 30% of the corn crop now in pollination, the high temperatures will likely curtail yield potential. And there are now some extended weather outlooks that say the Midwest will see hotter-and-drier-than-normal weather in late July into early August.
The “weather market” in the grains has taken a pause early this week, but veteran grain traders know the corn and soybean crops still have some rough waters ahead, especially since they are behind in development due to late planting.
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