Thursday, August 15–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight and trying to stabilize from recent selling pressure. U.S. stock indexes are pointed toward lower openings when the New York day session begins, after posting gains when the overnight session began.
Global stock markets were trying to stabilize earlier Thursday and then news hit the wires that China plans to retaliate against the U.S. for the new U.S. trade tariffs, some of which go into effect on September 1. China is demanding the U.S. lift all of its trade tariffs on Chinese products. President Trump tweeted Wednesday evening that China’s “humane” response to the Hong Kong protesters is tied to a trade deal being reached with the U.S. These developments appear to have the U.S.-China trade war taking another step back, regarding an agreement being reached anytime soon. Earlier this week the U.S. pushed back the timeline on some new tariffs being imposed on China, which briefly buoyed world stock markets.
U.S. Treasury and world government bond yields continue to fall, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%.
News reports said China last year curtailed its gold imports by 300 to 500 metric tons, in order to prevent capital from leaving the country in the form of gold purchases amid the weakening Chinese currency, the yuan.
The key “outside markets” today see Nymex crude oil prices lower and the U.S. dollar index modestly down, too.
It’s a very busy day for U.S. economic data Thursday, including the weekly jobless claims report, the Empire State manufacturing survey, the Philadelphia Fed business outlook survey, retail sales, preliminary productivity and costs, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy trading. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below 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 2,850.00 and then at the overnight high of 2,865.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,800.00 and then at the August low of 2,775.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. 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 7,500.00 and then at the overnight high of 7,554.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,388.00 and then at 7,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly higher and hit another contract high in early U.S. trading. Bulls have the strong overall near-term technical advantage. 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 technical resistance is seen at the overnight contract high of 166 13/32 and then at 167 even. Buy stops likely reside just above those levels. Shorter-term support lies at 165 even and then at the overnight low of 164 24/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 8.0
September U.S. T-Notes: Prices are solidly higher and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at 130.20.0 and then at the overnight low of 130.11.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight contract high of 130.31.5 and then at 131.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. Bulls have the firm 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 early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.915 and then at 98.000. Shorter-term support is seen at Wednesday’s low of 97.50 and then at this week’s low of 97.125. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
September Nymex crude oil prices are lower in early U.S. trading. Bears have the slight overall near-term technical advantage amid a price downtrend in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below 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 $55.00 and then at the overnight high of $55.33. Look for sell stops just below technical support at the overnight low of $53.77 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were mixed but mostly firmer in overnight trading. Corn was up around 2 cents, soybeans up 1 to 2 cents and wheat steady to up 3 cents. The grain market bulls late this week are trying to stabilize prices after the selling pressure seen in the wake of Monday’s USDA report that was fully bearish for corn and wheat.
News Thursday that China plans to retaliate against the U.S. for the new U.S. trade tariffs, some of which go into effect on September 1, are another negative element for the grain markets. China is demanding the U.S. lift all of its trade tariffs on Chinese products. President Trump tweeted Wednesday evening that China’s “humane” response to the Hong Kong protesters is tied to a trade deal being reached with the U.S. These developments appear to have the U.S.-China trade war taking another step back, regarding an agreement being reached anytime soon. Earlier this week the U.S. pushed back the timeline on some new tariffs being imposed on China, which briefly assuaged the world marketplace.
Grain traders will closely examine Thursday morning’s weekly USDA export sales report. Demand for U.S. grains has been tepid in recent months. Traders are also scanning the weekly export sales data for any new purchases from China. However, with today’s news coming from China, any solid purchases from that nation seem unlikely any time soon.
The US National Oilseed Processors Association (NOPA) crush numbers are set to be released later today. Traders expect to see July crush come in around 155.8 million bushels.
Corn Belt weather remains benign for the US corn and soybean crops, which is bearish for prices. Late this week sees temperatures rising a bit in the region, but with scattered rainfall. It’s mid-August and the window is rapidly closing on any heat/dry stress developing for the soybean and corn crops. The next major weather threat would be an early frost in the Corn Belt that could reduce corn and soybean yields.
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