Friday, July 10–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading, including in China, where an eight-session winning streak in the Shanghai composite index was halted Friday. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Trader and investor risk appetite has receded late this week, on growing ideas the U.S. and global economies’ heretofore rapid recoveries are now stalling out. More and more market participants are reckoning global stock markets have rallied too far, too fast, given current, general economic and business conditions.
Said one stock market analyst in a Friday morning email dispatch: “While global equities blissfully ignored the deteriorating economic conditions around the world in the previous quarter, the moment of reckoning could arrive when the U.S. earnings season kicks off next week. The second-quarter results are set to lay bare the pandemic’s impact to a greater extent compared to the previous quarter’s figures and this could prove to be one of Wall Street’s worst earnings seasons. It remains to be seen whether market participants have the stomach to digest such despairing numbers.”
One explanation for the global stock markets’ surprising strength in the face of the pandemic is the huge influx of stimulative cash from central banks that saw part of the cash flow into the stock markets.
The important outside markets today see Nymex crude oil prices lower and trading around $38.75 a barrel. The U.S. dollar index is slightly down early today. The yield on the benchmark U.S. Treasury 10-year note has dipped this week and is currently around the 0.58% level—the lowest since April. The increasing investor demand for U.S. Treasuries suggests “flight-to-quality” moves amid growing uneasiness in the marketplace. Gold this week also benefitted from more safe-haven trader and investor demand.
U.S. economic data due for release Friday includes the producer price index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,184.00 and then at 3,200.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,105.25 and then at 3,062.75. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are slightly down in early U.S. trading. Bulls remain in solid overall technical control. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the record high of 10,774.25 and then at 10,850.00. On the downside, shorter-term support is seen at 10,600 and then at 10,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher and hit a 2.5-month high in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 181 14/32 and then at 182 even. Shorter-term support lies at the overnight low of 179 31/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 7.0
September U.S. T-Notes: Prices are firmer and hit a more-than-three-month high in early U.S. trading. Bulls have the solid 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 bullish early today. Shorter-term resistance lies at the overnight high of 139.22.5 and then at 139.28.0. Shorter-term technical support lies at the overnight low of 139.10.0 and then at 139.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
EURO CURRENCY
The September Euro currency futures are near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but trading has been choppy. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1386 and then at 1.1400. Shorter-term support is seen at the overnight low of 1.1270 and then at this week’s low of 1.1236. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
August Nymex crude oil prices are lower in early U.S. trading. Bulls are fading. A gentle price uptrend on the daily chart appears to be rolling over. The shorter-term moving averages are neutral early today as the 4-day is even with 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 $39.81 and then at $40.00. Look for sell stops just below technical support at $38.50 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed to firmer in early U.S. pre-market trading. A weather market is playing out in the U.S. Corn Belt, as weather forecasts are now a bit more bullish, calling for drier and warmer conditions the next couple weeks. Traders are awaiting this morning’s USDA monthly supply and demand report. Look for active trading in the grains today, and with an upside bias.
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