Wednesday, August 12–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up in overnight trading and the U.S. stock indexes are also pointed toward higher openings when the New York day session begins. At mid-week, risk appetite is elevated and there are signs marketplace psychology is changing a bit regarding the Covid-19 pandemic. Even though most believe the Russian vaccine approval announced Tuesday is premature and a stunt by Russian President Putin, there appears to be growing notions the worst of the coronavirus may be behind—both economically and in the human toll. Nations are working feverishly on a legitimate vaccine that may be available in the fourth quarter of this year, and if not then it would likely come early next year. Some health experts are now saying that humans’ own self-defense systems may work better at fighting off Covid than most in the health profession initially expected. Major global economies are rebounding, if even some are doing it in fits and starts, and it’s becoming less likely there will be the kind of encompassing business shutdowns like those which occurred in the spring, even if the pandemic remains uncontrolled. In the U.S., Covid infection rates have fallen this week and the U.S. Congress may be inching closer to a new stimulus package for Americans.
All of the aforementioned elements are bullish for stocks and some commodities, and bearish for safe-haven U.S. Treasuries, gold and silver. Yields on the benchmark U.S. 10-year Treasury note have climbed rapidly this week and are presently fetching around 0.66% after hovering around 0.5% and near a record low just last week. Gold futures were down over $115 at one point Tuesday afternoon, while silver lost over $4.00 an ounce.
In overnight news, Euro zone June industrial output rose 9.1% from May but was down 12.3%, year-on-year. Meantime, the U.K. saw its second-quarter GDP drop 20.4%, but that reading was a bit better than expected.
The important outside markets today see Nymex crude oil prices firmer and trading around $42.25 a barrel. The U.S. dollar index is slightly down.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings, the weekly DOE liquid energy stocks report, and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher in early U.S. trading. Prices are close to the record high scored in February. Bulls have the solid overall near-term technical advantage amid a 4.5-month-old price uptrend in place. 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 early today. Today, shorter-term technical resistance comes in at this week’s high of 3,379.00 and then at the record high of 3,396.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,319.50 and then at 3,300.00. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading. Bulls remain in solid overall technical control. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 11,157.75 and then at last week’s record high of 11,283.25. On the downside, shorter-term support is seen at this week’s low of 10,845.50 and then at 10,700.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower and hit a four-week low in early U.S. trading. Bulls have the overall near-term chart advantage but are fading fast this week. A price uptrend on the daily chart has been negated. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 179 even and then at the overnight high of 179 31/32. Shorter-term support lies at the overnight low of 178 16/32 and then at 178 even. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are down and hit a four-week low in early U.S. trading. Bulls still have the near-term technical advantage but are fading this week. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 139.10.0 and then at the overnight high of 139.16.0. Shorter-term technical support lies at the overnight low of 139.03.5 and then at 139.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1817 and then at 1.1850. Shorter-term support is seen at the overnight low of 1.1719 and then at 1.1700. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $42.94 and then at the August high of $43.52. Look for sell stops just below technical support at the overnight low of $41.53 and then at this week’s low of $41.17. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are weaker in early U.S. pre-market trading. Bears remain in control amid generally non-threatening U.S. weather. Traders are still assessing the crops impact of a major wind storm that hit the heart of the U.S. Corn Belt Monday. The big news event for the grain markets this week will be Wednesday’s monthly USDA supply and demand report. That report is not expected to be bullish.
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