Monday, August 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. The U.S. stock indexes are also pointed toward higher openings when the New York day session begins. U.S. stock indexes have had a very good month of August, with the Nasdaq and S&P again hitting record highs overnight. Traders and investors remain in upbeat moods heading into the fall. The pandemic is still seriously gripping parts of the U.S. and the world but hopes are high that a credible vaccine will arrive sooner rather than later. Also, most reckon that major governments will not put their economies on nearly complete lockdown again even if a second wave of the virus hits later this fall.
In overnight news, the official gauge of China’s factory activity rose at a slower pace in August that expected. China’s official manufacturing purchasing managers’ index fell to 51.0 in August from 51.1 in July. The reading was lower than the average forecast of 51.2. However, the August reading was the sixth consecutive month that the index was above the 50 mark that suggests expansion.
The important outside markets today see Nymex crude oil prices higher and trading around $43.50 a barrel. The U.S. dollar index lower and near its recent two-year low. The yield on the U.S. Treasury 10-year note is trading around 0.74% today.
U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading and hit another record high overnight. Bulls have the solid overall near-term technical advantage amid a five-month-old price uptrend in place. There are no early chart clues to suggest a market top is close at hand. 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 to bullish early today. Today, shorter-term technical resistance comes in at the overnight record high of 3,524.50 and then at 3,550.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Friday’s low of 3,480.75 and then at Thursday’s low of 3,464.75. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher and hit another record high overnight. Bulls remain in solid overall technical control. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight record high of 12,091.75 and then at 12,200.00. On the downside, shorter-term support is seen at 11,900.00 and then at 11,800.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the overall near-term chart advantage as prices are trending lower. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-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 176 21/32 and then at 177 even. Shorter-term support lies at the overnight low of 175 27/32 and then at last week’s low of 175 5/32. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded badly recently and bears are working on starting a price downtrend. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-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 139.10.5 and then at 139.16.0. Shorter-term technical support lies at 139.00.0 and then at last week’s low of 138.23.0. 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. Bulls have the solid overall near-term technical advantage. Prices have been trending up for four months. 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 August high of 1.1973 and then at 1.2000. Shorter-term support is seen at the overnight low of 1.1887 and then at Friday’s low of 1.1814. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
October Nymex crude oil prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage, but prices have been trading sideways at higher levels for weeks. A
Wall Street Journal report last week said crude oil futures options traders are using a “strangle” strategy (selling puts and calls) to keep price action sideways and volatility low. 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 bullish early today. Look for buy stops to reside just above technical resistance at the August high of $43.78 and then at $44.00. Look for sell stops just below technical support at the overnight low of $42.90 and then at $42.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are solidly higher in early U.S. pre-market trading. Bulls are in near-term technical control, amid deteriorating late-season crop conditions for U.S. corn and soybeans. Weather in the U.S. Corn Belt was mostly dry over the weekend and USDA will likely report deteriorating crop conditions Monday afternoon. Speculators are showing more interest in the grain futures markets on the long side. Look for more upside price action in the grains in the near term.
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