Friday, July 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to weaker overnight. The U.S. stock indexes are pointed toward mixed to firmer openings when the New York day session begins. The stock indexes have become a bit wobbly late this week, on renewed worries about Covid-19 surging in some regions of the world. Also, political tensions between the U.S. and China have ratcheted up this year, with reports saying the U.S. is set to sanction more Chinese companies. Also, the tenor of the marketplace appears to have changed from one of strong economic recoveries igniting rising inflation, to one of stagnating economic recoveries prompting central banks to keep their money policies very accommodative for longer.
Reports Friday say the Biden administration is set to tackle big technology companies that are monopolistic. President Biden will reportedly sign an executive order to loosen the grip of big tech companies.
In other overnight news, China’s inflation readings eased in June, prompting China’s central bank to ease its monetary policy. The People’s Bank of China reduced the reserve ratio requirement by 0.5% to boost lending. China’s consumer price index was reported up 1.1% in June versus a rise of 1.3% in May, year-on-year. The producer price index in June rose 8.8% compared to up 9.0% in May, year-on-year.
The key outside markets today see the U.S. dollar index weaker, while Nymex crude oil prices are firmer and trading around $73.75 a barrel. The yield on the benchmark U.S. 10-year Treasury note is presently fetching 1.336%.
U.S. economic data due for release Friday is light and includes monthly wholesale trade.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher in early U.S. trading. 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 early today. Today, shorter-term technical resistance comes in at the contract high of 4,353.25 and then at 4,380.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,279.25 and then at 4,250.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are slightly down in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at Thursday’s high of 14,822.00 and then at the record high of 14,883.75. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 14,600.00 and then at this week’s low of 14,540.00. Sell stops likely reside 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 solidly lower on profit taking after hitting a five-month high Thursday. A price uptrend is still in place on the daily chart and bulls have the firm 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 the overnight high of 163 22/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at 162 16/32 and then at 162 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are solidly lower in early U.S. trading and seeing profit taking after hitting a 4.5-month high on Thursday. 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 resistance lies at the overnight high of 133.26.0 and then at 134.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 133.10.0 and then at 133.06.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are higher in early U.S. trading on short covering. Prices this week hit a three-month low. The shorter-term moving averages for the Euro 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 for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1911 and then at 1.1950. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1797 and then at 1.1750. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. Bulls have faded this week. A bearish “key reversal” down on the daily bar chart this week is one clue that a market top is in place. The shorter-term moving averages are neutral early today as the 4-day is below 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 $75.00 and then at $76.00. Look for sell stops just below technical support at the overnight low of $72.72 and then at $72.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures were narrowly mixed overnight. Traders are awaiting this morning’s weekly USDA export sales report. But the main focus is on Corn Belt weather that is wet. Grain market bulls suffered a major blow this week as a weather market fizzled. Don’t be surprised if the big “fund” traders soon set up big short positions in the grains and as the “reflation” trade has also fizzled.
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