Tuesday, August 29–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
News that North Korea fired a ballistic missile over Japan has rattled world markets. Global stock indexes are lower and safe-haven assets like gold and U.S. Treasuries are higher. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Gold prices hit an 11-month high overnight, as a combination of safe-haven demand and technical buying are boosting the yellow metal.
The Euro currency hit another 2.5-year high overnight, while the Japanese yen also surged on safe-haven demand from Asian traders and investors. The U.S. dollar index dropped to another 15-month low. The greenback is being further hobbled by the hurricane damage in Texas, which is likely to reduce U.S. GDP in the third quarter.
It now appears the ball is in the Trump administration’s court after North Korea’s latest provocation. North Korea is seemingly daring the U.S. to make a military move, after recent tough talk that has come from the U.S.
The other outside market finds Nymex crude oil futures slightly lower Tuesday. The hurricane and ensuing torrential rains have flooded the Houston, Texas region, including major gasoline refineries. This will reduce supplies of U.S. gasoline, but also demand for crude oil, in the coming weeks, or longer. That’s bearish for crude and bullish for gasoline futures.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the S&P/Case-Shiller home price index, and the consumer confidence index. The major U.S. data point of the
week is Friday’s employment situation report from the Labor Department.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are lower in early U.S. trading, amid risk aversion. There are chart clues that a near-term market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,433.25 and then at Monday’s high of 2,447.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,419.25 and then at the August low of 2,414.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
Nasdaq index December futures: Prices are lower in early U.S. trading today. There are still chart clues that signal that a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 5,838.50 and then at Monday’s high of 5,863.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,784.50 and then at the August low of 5,760.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart. 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 156 28/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 20/32 and then at 155 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
December U.S. T-Notes: Prices are higher and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily bar chart. 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 bullish early today. Shorter-term resistance lies at the overnight contract high of 127.10.5 and then at 127.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 127.00.0 and then at the overnight low of 126.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The December U.S. dollar index is lower and hit another contract and 15-month low in early U.S. trading. 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 and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 92.000 and then at Monday’s high of 92.260. Shorter-term support is seen at the overnight contract low of 91.350 and then at 91.000. Wyckoff’s Intra Day Market Rating: 3.0
NYMEX CRUDE OIL
October Nymex crude oil prices are slightly lower. Bears have gained the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $47.00 and then at $47.50. Look for sell stops just below technical support at Monday’s low of $46.15 and then at $45.50. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were lower overnight. Grain market bears remain in solid overall near-term technical control. Not much new early this week. Traders are looking ahead to the U.S. harvest of corn and soybeans, which is just a few weeks away. Traders are also wondering when the grains will put in their “harvest lows.”