Markets Roiled by Trump Threat of “Fire and Fury” Against North Korea

Wednesday, August 9–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

There is keener anxiety and risk aversion in the marketplace Wednesday after U.S. President Donald Trump warned North Korea there would be “fire and fury like the world has never seen” if North Korea keeps threatening the U.S. North Korea, meantime, responded by saying it may fire a missile toward the U.S. territory of Guam. North Korea had recently threatened to use its nuclear weapons against the U.S. after the United Nations slapped more sanctions on the rogue nation. Some U.S. lawmakers have criticized Trump for his remarks Tuesday on North Korea, saying he should tone down his rhetoric.

World stock markets sold off Wednesday on the heightened U.S.-North Korea tensions. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

Gold prices are solidly higher on safe-haven demand. U.S. Treasuries are also seeing safe-haven buying after Trump’s North Korea remarks to reporters in New Jersey on Tuesday.

The U.S. dollar index is slightly weaker in early U.S. trading Wednesday. The index has been trending lower all year long and the bears have the strong near-term technical advantage. However, more price strength in the greenback this week would begin to suggest a market bottom is in place.

Meantime, Nymex crude oil futures are slightly up and trading just below $50.00 a barrel. OPEC members are meeting this week in Abu Dhabi. That meeting will be closely monitored by energy market watchers.

In other overnight news, China’s consumer price inflation ticked down in July. China’s consumer price inflation was reported at up 1.4% in July, year-on-year, versus a rise of 1.5% in June. The July number was slightly lower than expected and continues a string of reports from major world economies that show still-very-low inflation levels.

There was another apparent terror attack in France Wednesday. Several were injured when a car rammed several French soldiers.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, preliminary productivity and costs, monthly wholesale trade and the weekly DOE liquid energy stocks report.

–Jim

U.S. STOCK INDEXES

S&P 500 September e-mini futures: Prices are lower in early U.S. trading, on risk aversion. Prices Tuesday hit a contract and record high before backing off and scoring a bearish “outside day” down on the daily bar chart. If there is good follow-through selling pressure today, then a more significantly bearish “key reversal” down would be confirmed, which would suggest a market top is in place. The bulls do still have the firm overall near-term technical advantage. The 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 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 the overnight high of 2,470.50 and then at 2,480.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,459.00 and then at 2,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0

Nasdaq index September futures: Prices are lower in early U.S. trading today. The bulls still have the firm overall near-term technical advantage. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 5,913.25 and then at 5,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,875.50 and then at last week’s low of 5,856.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher in early U.S. trading, on safe-haven demand. Bulls have the overall near-term technical advantage amid recent choppy trading. 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 high of 154 22/32 and then at 155 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 5/32 and then at this week’s low of 153 17/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

September U.S. T-Notes: Prices are higher in early U.S. trading, on safe-haven demand. Bulls have the overall near-term technical advantage but trading has been choppy recently. 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 bullish early today. Shorter-term resistance lies at the overnight high of 126.11.5 and then at last week’s high of 126.15.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.05.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The September U.S. dollar index is near steady in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 93.770 and then at 94.000. Shorter-term support is seen at this week’s low of 93.120 and then at 92.580. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

September Nymex crude oil prices are firmer in early U.S. trading. Bulls have the overall near-term technical advantage. Prices have been trending higher for six weeks. Look for buy stops to reside just above technical resistance at this week’s high of $49.79 and then at $50.00. Look for sell stops just below technical support at $49.00 and then at last week’s low of $48.37. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Grain futures markets were firmer overnight, on more short covering and bargain hunting following recent selling pressure. Grain market traders are now focused on world supply and demand fundamentals, which still favor the bears.