Monday, July 29–Jim Wyckoff’s Morning Markets Report
Asian and European stocks mixed to firmer overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session beings.
Markets are quieter heading into a busy data week in the U.S. On Tuesday the Federal Reserve’s Open Market Committee (FOMC) meets to determine monetary policy. The Fed is expected to raise interest rates at the conclusion of the meeting Wednesday afternoon. Friday the U.S. employment situation report for July is out. The key non-farm payrolls number is expected to be up around 165,000. In June, non-farm payrolls were up 224,000.
Also in focus this week is U.S.-China trade talks that are resuming at a high level. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today.
The key “outside markets” today see Nymex crude oil prices near steady and trading around $56.25 a barrel. The U.S. dollar index is slightly up and did poke to a new high for the year overnight.
U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady in early U.S. trading and not far below last week’s contract and record high. 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 to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,029.50 and then at 3,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 3,006.00 and then at 2,987.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are near steady in early U.S. trading and close to last week’s record and contract high. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 8051.75 and then at 8,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Friday’s low of 7,987.50 and then at 7,917.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are firmer in early U.S. trading. Bulls 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 and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 155 even and then at last week’s high of 155 18/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 14/32 and then at 154 even. 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. Bulls 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 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 127.09.0 and then at last week’s low of 127.01.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 127.16.0 and then at 127.20.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher and hit a new high for the year overnight. 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. 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 the overnight high of 97.855 and then at 98.000. Shorter-term support is seen at the overnight low of 97.640 and then at 97.500. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly lower in early U.S. trading. Trading has been choppy and sideways recently. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $57.00 and then at last week’s high of $57.64. Look for sell stops just below technical support at last week’s low of $55.33 and then at the July low of $54.85. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures prices were higher in overnight trading, on some short covering and fresh speculative buying interest. Corn and soybeans were up around 5 cents, while wheat was 5 to 8 cents higher.
The weather in the U.S. Corn Belt was warmer during the weekend but without much rain coverage in the region. The forecasts for this week call for cooler conditions but the corn and soybean crops are expected to see net drying to start off the critical growing month of August. To start off the trading week the Corn Belt weather is slightly favoring the bullish camp.
Traders will closely examine Monday afternoon’s weekly USDA crop progress reports. Traders are expecting a U.S. corn condition rating of 56% good to excellent versus 57% last week. The soybean condition rating is seen at 53% good to excellent from 54% last week.
High-level U.S.-China trade negotiators are meeting in China this week. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are in Shanghai for discussions that began today.
Trade in the U.S. grain markets could be choppy and sideways for the next two weeks, ahead of the all-important Aug. 12 monthly USDA report, at which time the size of the U.S. crops will be updated, as well as revised planted acres for U.S. corn and soybeans. With the very late planting of most of the corn and soybean crop, grain analysts have had a tougher time gauging the crop’s yield potential and the acreage mix.
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