Thursday, September 12–Jim Wyckoff’s Morning Markets Report
Asian stock markets were mostly up overnight, while European stock indexes were mostly weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Trader and investor risk appetite remains generally elevated late this week.
The trade tensions between the world’s two largest economies—the U.S. and China—have ratcheted down a notch this week. The U.S. has announced the slight delay of implementation of some tariffs on China that were set to take effect October 1. This follows the move by China this week to exempt some U.S. products from their own tariffs. Both sides are set to hold talks in October. Reports today said China is looking to narrow the scope of the negotiations to trade only—leaving out other matters that have been sticking points, such as national security.
Focus today is on the soon-to-conclude monetary policy meeting of the European Central Bank, at which time the ECB is expected to announce only a very slight interest rate cut, pushing rates further into negative territory. The Federal Reserve meets next week and is expected to cut U.S. interest rates by 0.25%. President Trump on Wednesday called the Federal Reserve “boneheads” for not lower interest rates faster and farther.
The U.S. economic highlight of the day Thursday is the consumer price index report for August, expected to come in at up 0.1% from July and up 1.8%, year-on-year.
The key “outside markets” today see Nymex crude oil prices lower and trading around $55.50 a barrel. Thursday sees a meeting of the OPEC oil cartel. The U.S. dollar index is weaker in early U.S. trading today.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly higher and hit a six-week high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,021.75 and then at the contract high of 3,032.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 2,973.75 and then at this week’s low of 2,958.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher and hit a six-week high in early U.S. trading. Bulls have the solid overall 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 and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,981.25 and then at 8,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,908.50 and then at 7,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are slightly up but hit a five-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded. A price uptrend on the daily chart has been negated. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 160 16/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 2/32 and then at 159 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are slightly higher but hit a five-week low in overnight trading. Bulls have the overall near-term technical advantage but have faded. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 129.19.0 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Wednesday’s high of 130.03.0 and then at 130.10.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The December U.S. dollar index is weaker 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 below 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 this week’s high of 98.275 and then at 98.490. Shorter-term support is seen at Wednesday’s low of 97.830 and then at this week’s low of 97.665. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
October Nymex crude oil prices are lower in early U.S. trading. Bulls have the slight overall near-term technical advantage as prices are in a five-week-old uptrend on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.34 and then at $57.00. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures prices were higher in overnight trading. Corn was up around 2 cents, soybeans about 8 cents higher and wheat up 3 to 5 cents. Grain market bulls are encouraged as the U.S. has announced the slight delay of implementation of some tariffs on China that were set to take effect October 1. This follows the move by China this week to exempt some U.S. products from their own tariffs. Both sides are set to hold talks in October. Reports today said China is looking to narrow the scope of the negotiations to trade only—leaving out other matters that have been sticking points, such as national security.
The data point of the week for the US grain markets is Thursday’s monthly USDA supply and demand report, including new government estimates of the size of the US crops. Look for quieter trading early today, ahead of that report, but for more active trading after the midday report’s release.
Weather in the US Midwest remains warm, rainy and non-threatening for the crops, including no signs of an early hard frost that would kill the still-maturing corn and soybean crops.
Bearish underlying elements for the grains include a strong U.S. dollar and slack worldwide demand for U.S. grains.
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