Thursday, September 5–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Traders and investors around the globe got another attitude-booster Thursday when China’s commerce ministry said trade talks with the U.S. will restart in Washington, D.C. in October. U.S. trade officials confirmed high-level talks will take place at that time. There were notions earlier this week the China-U.S. trade war had escalated recently. As has been the case for months, this situation vacillates from one day to the next, depending on the latest rhetoric coming from the world’s two largest economies. Most market watchers are not optimistic a U.S.-China trade deal will be reached this year.
While markets on Wednesday were relieved Hong Kong’s leader withdrew from consideration a proposed law that would allow the extradition of Hong Kong citizens to mainland China for criminal trials, reports Thursday said more protests are planned in the coming days. Right now it appears doubtful the reversal of Hong Kong’s leader on the extradition matter will be enough to quell the civil unrest.
Meantime, the Brexit turmoil continues as the October deadline for a U.K. deal with the European Union approaches. Prime Minister Boris Johnson wants out with no extension of time to reach a “soft” Brexit. However, votes this week from Parliament appear to have defeated his “hard” Brexit stance—at least for now. This news has boosted the British pound off its 34-year low against the U.S. dollar, reached earlier this week.
The key “outside markets” today see Nymex crude oil prices near steady and trading around $56.00 a barrel. The U.S. dollar index is lower on a normal downside correction after hitting a 27-month high Monday.
A very heavy slate of U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the ADP national employment report, revised productivity and costs, the ISM non-manufacturing report on business, the U.S. services and the global services PMIs, monthly chain store sales, the weekly DOE liquid energy stocks report, and manufacturers’ shipments and inventories.
With all the activity on a U.S.-holiday-shortened trading week, the marketplace almost forgot about the August U.S. employment situation report from the Labor Department that is out Friday morning. The key “non-farm” payrolls component of the report is expected to show a gain of 150,000 in August.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher and hit a five-week high in early U.S. trading. Bulls have gained the near-term technical advantage amid a bullish upside “breakout” from the choppy trading range on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,972.50 and then at 3,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,937.50 and then at Wednesday’s low of 2,902.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are higher and hit a five-week high in early U.S. trading. Bulls have regained the overall technical advantage amid a bullish upside “breakout” from the choppy trading range. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,859.25 and then at 7,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,800.00 and then at the overnight low of 7,736.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly lower in early U.S. trading, on more profit taking. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at 165 even and then at the overnight high of 165 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 164 17/32 and then at 164 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are solidly lower in early U.S. trading, on more profit taking. Bulls still 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 the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at the overnight low of 131.23.0 and then at last week’s low of 131.13.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 132.00.0 and then at the overnight high of 132.07.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is lower on more profit taking after hitting a 27-month high Tuesday. Bulls still 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.070 and then at Wednesday’s high of 98.490. Shorter-term support is seen at 97.500 and then at 97.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
October Nymex crude oil prices are near steady in early U.S. trading. Bears have the slight overall near-term technical advantage amid a seven-week-old price downtrend in place on the daily bar chart, but now just barely. The shorter-term moving averages are neutral early today as the 4-day is even with the 18-day. The 9-day is below 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 the overnight high of $56.65 and then at $57.00. Look for sell stops just below technical support at the overnight low of $55.75 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were firmer in overnight trading, amid more upbeat trader attitudes after China’s commerce ministry said on Thursday that trade talks with the U.S. will restart in Washington, D.C. in October. U.S. trade officials confirmed high-level talks will take place at that time. There were notions earlier this week the China-U.S. trade war had escalated recently. As has been the case for months, this situation vacillates from one day to the next, depending on the latest rhetoric coming from the world’s two largest economies. Most grain market watchers are not optimistic a U.S.-China trade deal will be reached this year. Corn was 2 to 3 cents higher, soybeans around 2 cents up and wheat about 5 cents higher. The grain futures are awaiting the start of the US soybean and corn harvests. There is still much uncertainty about the actual size of those US crops, following very late planting starts for both. Next week’s USDA monthly supply and demand report will give updates on the size of the US crops. Weather in the Midwest continues to be non-threatening. Also bearish is the strong US dollar on the foreign exchange market that makes US grains more expensive on the world market. The U.S. dollar index has backed off a bit late this week but is still no far below the 27-month high hit earlier this week.
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