Tuesday, June 16–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. stock indexes on Monday made a strong recovery from sharp early-day losses, due in part to the Federal Reserve announcing it has started buying corporate bonds, in an extension of an existing program that had only purchased corporate bond exchange traded funds. Reports also said the Trump administration is planning to spend $1 trillion on U.S. infrastructure improvements.
There is growing agreement the Federal Reserve will continue to deploy more firepower to support the U.S. economy. Such is ultimately bearish for the U.S. dollar as the U.S. government’s debt obligations continue to bulge. The U.S. dollar index is presently in a steep downtrend on the daily bar chart.
The U.S. economic highlight of the week will be Fed Chairman Jerome Powell’s two days of congressional testimony on Tuesday and Wednesday for his semi-annual economic report to Congress. He may provide more clarity and perspective on the Fed’s bond buying and other monetary policy moves. Traders will monitor to see if his comments expand on his sober assessment of the U.S. economy last week.
In other news, North Korea is ramping up its bellicose activities, as it blew up a meeting facility with South Korea that was just inside the North Korean border. Many look for North Korea to become more provocative with the U.S. as the U.S. presidential election approaches in November.
The important outside markets early today see the U.S. dollar index a bit weaker. Meantime, Nymex crude oil prices are higher and trading around $37.75 a barrel. The International Energy Agency said Tuesday global oil demand in 2020 will decline by 8.1 million barrels per day. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.75% level.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, retail sales, industrial production and capacity utilization, the NAHB housing market index, and manufacturing and trade inventories.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading. Bulls are working to recover from late last week’s sell off. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below 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 bullish early today. Today, shorter-term technical resistance comes in at 3,125.00 and then at 3,150.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,060.25 and then at 3,025.00. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are solidly higher in early U.S. trading as the bulls are recovering from late last week’s price pressure. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below 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 10,000.00 and then at last week’s high of 10,140.00. On the downside, shorter-term support is seen at the overnight low of 9,788.00 and then at 9,600.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 29/32 and then at 177 even. Shorter-term support lies at the overnight low of 175 12/32 and then at 175 even. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 138.20.0 and then at 139.03.0. Shorter-term technical support lies at the overnight low of 138.09.0 and then at 138.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 97.000 and then at last week’s high of 97.465. Shorter-term support is seen at the overnight low of 96.385 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are higher in early U.S. trading. A price uptrend on the daily chart has stalled out. 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 bearish early today. Look for buy stops to reside just above technical resistance at $38.00 and then at $39.00. Look for sell stops just below technical support at the overnight low of $36.68 and then at $36.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are mixed to firmer in early U.S. pre-market trading. Weather in the U.S. Midwest is still overall bearish and crop conditions are good, but not quite as good as traders expected, following Monday’s USDA crop progress readings. There are some long-range forecasts calling for drier and warmer weather, but rain is expected in parts of the Corn Belt by the end of this week. Bulls need a weather market in the U.S. Midwest to develop. More years than not, one does develop in the summer, to some degree.
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