Monday, July 8–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker in quieter overnight trading. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.
Last Friday’s strong U.S. jobs report has somewhat dented trader and investor enthusiasm on notions the Federal Reserve is now less likely to lower interest rates at its July monetary policy meeting. Friday’s jobs data rallied the U.S. dollar and pressured U.S. Treasury prices.
In overnight news, the Turkish lira is under pressure and dropped around 2% against the U.S. dollar after Turkey’s president fired the head of the Turkish central bank.
The key “outside markets” today see Nymex crude oil prices near steady and trading around $57.50 a barrel. Meantime, the U.S. dollar index is slightly down in early U.S. trading.
U.S. economic data due for release Monday is light and includes the employment trends index and consumer credit.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker on mild profit taking after hitting a contract and record high last Friday. Bulls have the solid overall near-term technical advantage. There are no early chart clues of a market top being 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 bearish early today. Today, shorter-term technical resistance comes in at Friday’s contract high of 3,006.00 and then at 3,025.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 2,971.25 and then at last week’s low of 2,955.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are weaker on mild profit taking after hitting a two-month high Friday. Bulls have the solid overall near-term technical advantage. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,863.50 and then at the contract high of 7,910.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,825.00 and then at last week’s low of 7,773.00. 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 firmer in early U.S. trading, on a bounce after solid losses Friday, after prices had hit a contract high early on Friday. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 155 21/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 30/32 and then at last week’s low of 154 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are firmer in early U.S. trading, on a corrective bounce from Friday’s solid losses. 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 the overnight low of 127.14.5 and then at last week’s low of 127.08.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.23.5 and then at 127.28.0. 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 near steady in early U.S. trading. Bulls have regained upside momentum following Friday’s solid gains. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.040 and then at the June high of 97.265. Shorter-term support is seen at the overnight low of 96.765 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
August Nymex crude oil prices are near steady in early U.S. trading. Bulls still have the slight overall near-term technical advantage. 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 to bearish early today. Look for buy stops to reside just above technical resistance at $58.00 and then at $59.00. Look for sell stops just below technical support at $57.00 and then at last week’s low of $56.04. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures prices were higher in the overnight trade Monday. Corn was up 5 to 8 cents, wheat up 2 to 4 cents and soybeans up around 4 cents. Focus to start the trading week will be Monday afternoon’s USDA crop progress reports and the corn and soybean crop ratings. The very slow planting pace for both crops has them behind normal in development. Weather in the U.S. Midwest is a mixed bag. More seasonal weather in the region has occurred the past week, which is bearish for prices. However, there are some weather forecasters calling for the building of a high-pressure ridge over the Midwest next week. That means higher temperatures and less rainfall. High-pressure ridges are also called “heat domes.” Corn has been the upside leader in grain prices for several weeks. Corn has begun to rebound but soybeans and wheat have lagged. It’s likely that more gains in corn this week would pull soybean and wheat prices higher, too. Historically, the early-July timeframe is critical for the grain markets, as weather patterns in the U.S. Midwest can change as mid-summer approaches. With the corn and soybeans behind in growth development this year, weather forecasts for the next two to three weeks will produce extra-sensitive reactions from grain traders.
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