Tuesday, August 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. The U.S. stock indexes are pointed to slightly higher openings when the New York day session begins, with S&P 500 and Nasdaq futures poking to record highs overnight.
In overnight news, the U.S. said it has fully pulled its troops and planes out of Afghanistan, ending a 20-year war with the Taliban, who declared victory over the world’s mightiest military.
The Euro zone consumer price index for August came in at up 3.0%, year-on-year, which was a bit hotter than expectations of up 2.7%. July’s CPI reading was up 2.2%.
China’s economy was jolted in August by the resurgence of the Covid virus. The world’s second-largest economy saw its unofficial non-manufacturing purchasing managers’ index (PMI) drop to 47.5 in August, compared to 53.3 in July. A reading below 50.0 suggests contraction in the sector. It was the lowest reading since February of 2020 for this segment of the PMI survey. Meantime, China’s manufacturing PMI in August came in at 50.1 from 50.4 in July.
Broker SP Angel today reported in an email dispatch that sales of gold jewelry in China have improved significantly over the past year among younger Chinese consumers–doubling demand in the first half of 2021. China’s overall economic recovery from the pandemic combined with the increasing popularity of e-commerce websites have helped the a boom in gold demand.
The key outside markets today see the U.S. dollar index weaker. Nymex crude oil futures prices are lower and trading around $68.65 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.287%.
U.S. economic data due for release Tuesday includes weekly chain store sales and the Johnson Redbook retail sales reports, the monthly house price index, S&P-Case-Shiller home index, the Chicago ISM business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are a bit weaker in early U.S. trading and did hit a contract and record high overnight. Bulls 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 4,532.25 and then at 4,550.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Monday’s low of 4,491.50 and then at 4,450.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are slightly weaker in early U.S. trading and did hit a contract and record high overnight. Bulls have the solid chart advantage. 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 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 contract high of 15,664.00 and then at 15,750.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at Monday’s low of 15,409.25 and then at 15,300.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are weaker in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above 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 163 26/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 162 28/32 and then at 162 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are slightly down in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133.22.0 and then at 134.00.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 133.09.0 and then at 133.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The December Euro currency futures are higher and hit a three-week high in early U.S. trading. Bears still have the overall near-term technical advantage but a downtrend on the daily bar chart has now been negated to suggest a near-term market bottom is in place. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.1900 and then at 1.1938. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1820 and then at 1.1800. 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. 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 below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at Monday’s high of $69.64 and then at $70.00. Look for sell stops just below technical support at Monday’s low of $67.67 and then at $67.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were mixed to lower overnight. Bulls are fading this week. Late-season rains across much of the U.S. Midwest have improved the corn and soybean crops and that’s bearish. The grain markets may trade sideways ahead of harvest and ahead of the Sept. 10 USDA monthly supply and demand report, when new crop production estimates will be released by the agency.
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