Wednesday, August 30–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight, on corrective bounces from selling pressure seen Tuesday. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. As has been the case recently, North Korea’s latest provocation to the U.S. by launching a missile over Japan Tuesday has not had a lasting impact on trader and investor risk aversion.
Gold prices are slightly lower on some mild profit taking from recent gains that pushed the yellow metal to an 11-month high on Tuesday.
In overnight news, the Euro zone’s economic sentiment indicator reached its highest reading in over 10 years in August. The number came in at 111.9 compared to 111.2 in July. This report falls into the camp of the Euro zone monetary policy hawks, who want the European Central Bank to wind down its bond-buying (quantitative easing) program that has been in place for years.
The key outside markets on Wednesday see the U.S. dollar index higher on a corrective bounce after hitting a 15-month low Tuesday. Meantime, Nymex crude oil futures are slightly lower. The hurricane and ensuing torrential rains that have flooded the Houston, Texas region, including major gasoline refineries, will reduce supplies of U.S. gasoline, but also reduce demand for crude oil, in the coming weeks, or longer.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, second-quarter gross domestic product, preliminary corporate profits, and the weekly DOE liquid energy stocks report.
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 is forecast to come in at up around 180,000.
–Jim
U.S. STOCK INDEXES
S&P 500 December e-mini futures: Prices are slightly higher in early U.S. trading. Prices have been trending lower for three weeks. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below 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 overnight high of 2,451.75 and then at 2,465.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,430.00 and then at this week’s low of 2,419.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index December futures: Prices are firmer in early U.S. trading today. There are still chart clues that signal that a market top is in place. Prices have been trending lower for four weeks. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 5,904.00 and then at 5,930.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,772.75 and then at 5,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
December U.S. T-Bonds: Prices are higher in early U.S. trading. Prices Tuesday hit a contract high. Bulls 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 neutral early today. Shorter-term technical resistance is seen at the contract high of 156 28/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 16/32 and then at 155 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are near steady in early U.S. trading. Prices Tuesday hit a contract high. Bulls 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 127.00.0 and then at the contract high of 127.10.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.25.0 and then at 126.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The December U.S. dollar index is firmer on short covering after hitting a contract and 15-month low on Tuesday. Bears have the solid 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at 92.500 and then at 92.750. Shorter-term support is seen at the overnight low of 91.975 and then at Tuesday’s contract low of 91.350. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are slightly lower. Bears have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $47.00 and then at $47.50. Look for sell stops just below technical support at this week’s low of $45.76 and then at $45.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were narrowly mixed overnight. 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.”