Thursday, August 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Some risk aversion has returned to the marketplace amid new tensions between China and the U.S. China said it would sanction U.S. firms involved in a sale of U.S. fighter jets to Taiwan.
The Chinese yuan further depreciated against the U.S. dollar Thursday, trading around 7.085 and at the weakest level in 11 years.
Purchasing managers’ surveys from Australia and the Euro zone were downbeat today. The Eurozone manufacturing purchasing managers index (PMI) came in at 47.0 in August. A reading below 50.0 suggests contraction in the sector. Importantly, Germany, the workhorse for the Euro zone, saw its manufacturing PMI at only 43.6 in August.
Traders today are awaiting the minutes of the July meeting of the European Central Bank. The annual Federal Reserve Jackson Hole symposium gets under way today, too. Fed Chairman Jerome Powell is set to give a speech at the confab on Friday. The Fed and the ECB are leaning easy on their monetary policies.
The key “outside markets” today see Nymex crude oil prices firmer and trading around $56.00 a barrel. The U.S. dollar index is slightly higher.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash manufacturing and services PMIs, leading economic indicators and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above 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 last week’s high of 2,944.25 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located 2,900.00 and then at this week’s low of 2,893.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above 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 7,789.50 and then at 7,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,652.25 and then at this week’s low of 7,616.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are modestly lower in early U.S. trading. Bulls still have the solid 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 neutral to bearish early today. Shorter-term technical resistance is seen at 165 even and then at this week’s high of 165 13/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 164 11/32 and then at 164 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 support lies at this week’s low of 130.09.5 and then at 130.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.23.5 and then at this week’s high of 130.30.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 98.335 and then at 98.445. Shorter-term support is seen at this week’s low of 97.990 and then at 97.680. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are firmer in early U.S. trading. Bears have the slight overall near-term technical advantage amid a five-week-old price downtrend still in place on the daily bar chart—but now just barely. 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 neutral early today. Look for buy stops to reside just above technical resistance at $57.00 and then at the August high of $57.40. Look for sell stops just below technical support at the overnight low of $55.44 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were just slightly higher in overnight trading. The focus of the US grain markets this week is the annual Pro Farmer Midwest crop tour that ends late Thursday. Early results are showing corn and soybean crops that are not meeting USDA’s latest yield predictions. Sadly, the tour was interrupted by a threat against a USDA employee on the tour, which prompted USDA to pull all of its attendees off the tour. Security was also heightened on the tour. Traders will closely scrutinized today’s weekly USDA export sales report. U.S. grains have seen tepid worldwide demand in recent months, due in large part to the U.S.-China trade war virtually shutting down Chinese purchases of U.S. ag products. Corn Belt weather forecasts are still calling conditions that are not threatening to the corn and soybean crops.
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