Friday, August 9–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. After a couple days of respite, trader and investor anxiety has returned to the global marketplace, heading into the weekend.
There is once again protesting in Hong Kong, this time at its main airport. Market watchers wonder how long mainland China will allow the civil unrest.
Slowing world economic growth prospects are in greater focus today after the U.K. economy contracted in the second quarter by 0.2% from the first quarter and was down 0.8%, year-on-year. Worries about the U.K. Brexit are hurting consumer confidence in the country.
The International Energy Agency on Friday lowered world crude oil demand growth by 100,000 barrels per day, citing concerns about world economic growth, including world trade relations.
Meantime, China reported its July producer price index down 0.3%, year-on-year, but consumer prices rose 2.8% in the same period. That’s a negative signal for China’s consumers and producers.
Japan did get some good economic news Friday, as its GDP was reported up 0.4% in the second quarter from the first quarter, and up 1.7%, year-on-year.
The yield on the benchmark U.S. Treasury note fell overnight to around 1.6%, on safe-haven demand. Gold prices are also higher.
China’s central bank on Friday again set its currency, the yuan, exchange rate with the U.S. dollar at just above the 7 level, which is the level at which the U.S. has deemed problematic. This exchange rate will continue to be closely monitored.
The key “outside markets” today see Nymex crude oil prices modestly higher and trading around $52.75 a barrel. The U.S. dollar index is trading slightly lower in early U.S. action.
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 lower in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are still 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 2,940.75 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,900.00 and then at 2,870.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below 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 7,738.50 and then at 7,775.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,600.00 and then at 7,526.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 162 11/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 161 18/32 and then 161 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at the overnight low of 129.29.0 and then at 129.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.08.5 and then at 130.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. Bulls have the 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 and 18-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 97.565 and then at this week’s high of 97.930. Shorter-term support is seen at this week’s low of 96.980 and then at 96.750. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading, on a corrective bounce from recent strong selling pressure earlier this week. Prices Wednesday hit a new low for the year. Bears have the overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $53.77 and then at $54.00. Look for sell stops just below technical support at the overnight low of $52.37 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mixed to firmer in overnight trading, on some more short covering and position evening. Corn was fractionally up, soybeans around 5 cents higher and wheat narrowly mixed.
The grain markets could be bearishly impacted Friday if the U.S. stock market sees a significant sell off heading into the weekend.
Traders are anxiously awaiting Monday morning’s key USDA monthly supply and demand report, which will include estimates of the size of the US and world crops and the updated US corn-soybean acreage mix that is so much in question at present. Look for very active trading in the grains Monday, in the aftermath of the important USDA report.
Weather in the US Corn Belt remains mostly non-threatening to the US corn and soybean crops, but with some dry areas of the region. The extended weather forecasts out to past the middle of August are not worrisome. It appears the next major weather threat to the corn and soybean crops would be an early frost, which some weather forecasters say is a higher probability this year.
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