Wednesday, August 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Traders and investors remain tentative at mid-week, following the Federal Reserve’s annual Jackson Hole symposium that saw U.S. Fed officials, including Chairman Powell, lean aggressively hawkish on U.S. monetary policy. Other major central banks of the world are also tightening their monetary policies—all in an effort to tamp down problematic price inflation, even if it slows global economic growth.
Speaking of inflation, the Euro zone got more hot readings as the August consumer price index rose 9.1%, year-on-year, which was slightly above market expectations.
The markets have not reacted much, but are paying close attention to reports that Taiwan’s military fired warning shots at drones, thought to be from mainland China, that were flying close to Taiwan.
The U.S. data point of the week is the August U.S. employment situation report from the Labor Department on Friday. The key non-farm payrolls growth number is forecast to come it up 325,000 in August versus the July report showing a gain of 528,000 non-farm jobs.
The key outside markets today see Nymex crude oil prices solidly lower and trading around $88.50 a barrel. Reports are now indicating OPEC-plus will not cut its collective crude oil production. The U.S. dollar index is higher in early U.S. trading. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.151%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the Chicago ISM business survey, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are a bit higher in early U.S. trading. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 4,089.50 and then at 4,125.00. Support for active traders is seen at this week’s low of 3,981.75 and then at 3,950.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are 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 the overnight high of 12,553.25 and then at this week’s high of 12,730.25. On the downside, shorter-term support is seen at the overnight low of 12,427.00 and then at this week’s low of 12,325.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a two-month low in early U.S. trading. Prices are in a four-week-old downtrend on the daily bar chart and bears have the advantage. 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 136 14/32 and then at this week’s high of 137 2/32. Shorter-term support lies at the overnight low of 135 11/32 and the at 135 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and hit a two-month low in early U.S. trading. Prices are in a four-week-old downtrend on the daily bar chart and bears have the technical advantage. 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 to bearish early today. Shorter-term resistance lies at the overnight high of 117.07.5 and then at this week’s high of 117.17.0. Shorter-term technical support lies at the overnight low of 116.22.5 and then at 116.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.0169 and then at 1.0200. Shorter-term support is seen at the contract low of .9988 and then at .9950. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are solidly lower in early U.S. trading. Bulls are fading fast. 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 $91.00 and then at the overnight high of $92.73. Look for sell stops just below technical support at the overnight low of $88.27 and then at $87.00. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
U.S. grain futures were lower overnight, on corrective pullbacks from recent gains. Beneficial rains have fallen in the Corn Belt and Plains states recently and that’s bearish for the grains, especially soybeans. Slumping crude oil prices and keener risk aversion this week are also negative for the grain markets.
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