Thursday, July 8–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. The U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Keener risk aversion has returned to the marketplace late this week. Featured in the marketplace this week is traders unwinding their “inflation” positions. That means selling commodity markets and buying U.S. Treasuries. Nymex crude oil futures are lower today and trading around $71.50 a barrel after hitting a six-year high of $76.98 earlier this week. This week’s big losses in crude oil have created chart clues that suggest a market top is in place. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 1.253%–near a five-month low. Bond prices and yields move in the opposite direction. In Germany, the 10-year bund yield fell to minus 0.339% Thursday.
Covid-19 deaths worldwide topped 4 million this week and the Delta virus is continuing to spread. The marketplace is once again starting to pay more attention to this matter, after a few months of enjoying not having the pandemic near the front burner. Tokyo is in a near state of emergency in trying to deal with the virus as the intense spotlight of the Olympics is set to shine on Tokyo.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the weekly DOE liquid energy stocks report, the monthly chain store sales index and consumer credit.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading and seeing heavy profit taking after hitting a contract and record high Wednesday. Bulls still 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 4,353.25 and then at 4,380.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,280.25 and then at 4,260.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 3.5
September Nasdaq index futures: Prices are solidly down in early U.S. trading and seeing profit taking after hitting a contract and record high Wednesday. 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 14,822.00 and then at the record high of 14,883.75. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 14,569.50 and then at 14,500.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly higher and hit a five-month high in early U.S. trading. A price uptrend is in place on the daily chart and bulls have momentum and the firm overall 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 technical resistance is seen at 165 even and then at 165 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 164 even and then at the overnight low of 163 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
September U.S. T-Notes: Prices are solidly higher in early U.S. trading and hit a 4.5-month high. 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 134.03.0 and then at 134.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 133.24.0 and then at the overnight low of 133.16.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
EURO CURRENCY
The September Euro currency futures are higher in early U.S. trading on short covering. Prices Wednesday hit a three-month low. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1911 and then at 1.1950. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1797 and then at 1.1750. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are lower in early U.S. trading. Bulls have faded. A bearish “key reversal” down on the daily bar chart this week is one clue that a market top is in place. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $72.36 and then at $73.00. Look for sell stops just below technical support at the overnight low of $70.76 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were mostly higher overnight on corrective bounces after this week’s losses. Grain market bulls have suffered a major blow this week as a weather market quickly fizzled. Very good amounts of rainfall are forecast for the U.S. Corn Belt over the next week—right during the key pollination phase of growth for much of the corn crop. Don’t be surprised if the big “fund” traders this week set up big short positions in the grains and as the “reflation” trade is fading.
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