Thursday, August 31–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher overnight as investor risk appetite has up-ticked quickly after Tuesday’s latest provocation from North Korea, in which it fired a missile over Japan. Upbeat economic data from the U.S., China and the European Union is keeping investors in a positive mood. U.S. stock indexes are also pointed toward firmer openings when the New York day session begins.
Gold prices are weaker on the better investor risk appetite and on some more profit taking from recent gains that saw prices earlier this week hit an 11-month high.
Today is the last trading day of the month, which makes it a more important day from a charts perspective. A monthly high or low close in a market today would be very significant, from a technical perspective.
In overnight news, inflation in the Euro zone came in higher than expected, at up 1.5% in August, year-on-year. The July reading was up 1.3%. The European Central Bank wants to see annual inflation of around 2.0%. Also, Euro zone unemployment held steady in July, at 9.1%.
China on Thursday reported its August manufacturing purchasing managers’ index at 51.7, which was above market expectations. A reading above 50.0 suggests growth in the sector.
The major U.S. data point of the week is Friday’s employment situation report for August from the Labor Department. The key non-farm jobs number was forecast to come in at up around 180,000. However, Wednesday’s higher-than-expected ADP jobs number has many thinking Friday’s employment report will also be a surprise to the upside.
The U.S. dollar index is higher early Thursday, on more short covering after hitting a 15-month low on Tuesday. The greenback bears still have the firm overall near-term technical advantage.
The other key outside market sees Nymex crude oil futures firmer on short covering. Prices are in a four-week-old downtrend on the daily bar chart and the bears have the overall near-term technical advantage.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, personal income and outlays, the ISM Chicago business survey, pending home sales and the monthly retail chain store sales reports.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are firmer and hit a two-week high in early U.S. trading. Bulls have regained upside momentum this week. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 2,472.00 and then at the contract high of 2,486.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,453.00 and then at Wednesday’s low of 2,440.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index December futures: Prices are firmer and hit a three-week high in early U.S. trading today. The bulls have this week regained good upside momentum. Shorter-term moving averages (4- 9-and 18-day) are neutral 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 5,963.25 and then at the contract high of 6,002.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,940.75 and then at 5,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are weaker in early U.S. trading, on profit taking after prices Tuesday hit a contract high. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at 155 31/32 and then at the contract high of 156 28/32. Buy stops likely reside just above those levels. Shorter-term support lies at 155 even and then at 154 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are weaker in early U.S. trading, on profit taking after prices Tuesday hit a contract high. Bulls still 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 bearish early today. Shorter-term resistance lies at the overnight high of 126.28.5 and then at 127.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 126.20.0 and then at 126.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer on more short covering after hitting a contract and 15-month low on Tuesday. Bears still have the firm 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 bullish early today. The dollar index finds shorter-term technical resistance at 93.000 and then at 93.340. Shorter-term support is seen at the overnight low of 92.580 and then at 92.230. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are firmer on short covering after hitting a five-week low overnight. Bears still have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $46.72 and then at $47.00. Look for sell stops just below technical support at the overnight low of $45.58 and then at $45.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were narrowly mixed overnight. Traders will closely examine this morning’s weekly USDA export sales report. Grain market bears remain in solid overall near-term technical control. 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.”