Wednesday, July 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders and investors are more risk averse at mid-week.
China-U.S. relations continue to erode after the U.S. abruptly closed the Chinese consulate in Houston, Texas. China called the U.S. move an “unprecedented escalation” in U.S-China tensions.
President Trump has started doing Covid-19 briefings again and on Tuesday said the pandemic in the U.S. will “get worse before it gets better.” Trump also did an about-face by urging Americans to wear masks.
Hopes of another U.S. government financial aid package to Americans coming quickly have faded this week, amid disagreement among legislators on the package’s contents.
A feature in the marketplace this week is the gold and silver markets bulls on a rampage. Gold prices hit a nearly nine-year high overnight and are not far below the record high of $1,920 scored in 2011. Silver prices hit a 6.5-year high overnight and prices are poised for more big gains. Safe-haven demand, technical buying, a weaker U.S. dollar index, rising crude oil prices, and increasing consumer demand from China and possibly India are all fueling the bull runs in the two precious metals markets.
The important outside markets today see Nymex crude oil prices weaker and trading around $41.50 a barrel after hitting a 4.5-month high on Tuesday. The U.S. dollar index is weaker in early trading and near this week’s 4.5-month low. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.59% level.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index, existing home sales, and the weekly DOE liquid energy stocks story.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading on some mild profit taking in a bull market. Bulls still have the solid overall near-term technical advantage amid a four-month-old price uptrend in place. 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 early today. Today, shorter-term technical resistance comes in at this week’s high of 3,273.25 and then at 3,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,227.25 and then at this week’s low of 3,190.25. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are slightly higher and very close to the record high in early U.S. trading. Bulls remain in solid overall technical control and have gained fresh power this week, to suggest more upside in the near term. 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 11,058.50 and then at 11,200.00. On the downside, shorter-term support is seen at the overnight low of 10,781.25 and then at 10,650. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the solid chart 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 neutral to bullish early today. Shorter-term technical resistance is seen at the July high of 181 14/32 and then at 182 even. Shorter-term support lies at the overnight low of 180 8/32 and then at this week’s low of 179 22/32. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are firmer 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 July high of 139.22.5 and then at the March high of 139.25.0. Shorter-term technical support lies at the overnight low of 139.15.5 and then at this week’s low of 139.10.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are higher and hit a 12-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1598 and then at 1.1650. Shorter-term support is seen at the overnight low of 1.1520 and then at 1.1500. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
September Nymex crude oil prices are weaker in early U.S. trading, on a corrective pullback. A gentle price uptrend on the daily chart has been restarted. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $41.93 and then at this week’s high of $42.51. Look for sell stops just below technical support at $40.74 and then at $40.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are mixed but mostly firmer in early U.S. pre-market trading. The weather in the U.S. Corn Belt is benign. That’s bearish, especially for corn. China is still stepping up and buying U.S. grains—mostly soybeans–and that has supported U.S. beans. Wheat futures have backed off this week but bulls are now working on keeping an uptrend alive in SRW wheat.
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