Trade War Worries Wilting World Stock Markets

Tuesday, June 19–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were solidly lower overnight and U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. Risk aversion is high today after the Trump administration has threatened China with still more trade tariffs, and China has again responded with its own latest threats. The world’s two largest economies appear headed for a full-blown trade war.

There is some safe-haven demand seen for gold, U.S. Treasuries and the U.S. dollar, but not major money flows into those assets.

In other news, European Central Bank President Mario Draghi told reporters today the ECB could opt to extend its bond-buying program (quantitative easing) beyond its now-scheduled ending date of December—if the Euro zone shows further economic weakness.

The key “outside markets” today find the U.S. dollar index higher and hitting another 11-month high overnight. Meantime, Nymex crude oil prices are lower and trading just below $65.00 a barrel.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, and new residential construction.

–Jim

U.S. STOCK INDEXES

September S&P 500 e-mini futures: Prices are solidly lower and hit a two-month low in early U.S. trading. The bulls still have the overall near-term technical advantage, but are now fading. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,780.25 and then at last week’s high of 2,796.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,735.75 and then at 2,725.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 3.5

September Nasdaq index December futures: Prices are solidly lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are still 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 7,250.00 and then at the overnight high of 7,279.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,162.00 and then at 7,150.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5.

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher and hit a three-week high in early U.S. trading, on more short covering and safe-haven demand. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 144 25/32 and then at 145 even. Buy stops likely reside just above those levels. Shorter-term support lies at 144 even and then at the overnight low of 143 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

September U.S. T-Notes: Prices are higher and hit a two-week high in early U.S. trading, on more short covering and some safe-haven demand. 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 bullish early today. Shorter-term resistance lies at the overnight high of 120.06.0 and then at 120.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 119.27.0 and then at the overnight low of 119.21.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The September U.S. dollar index is higher and hit a contract and 11-month high 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 the overnight contract high of 94.925 and then at 95.000. Shorter-term support is seen at 94.500 and then at the overnight low of 94.175. Wyckoff’s Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

July Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $66.00 and then at last week’s high of $67.16. Look for sell stops just below technical support at $64.00 and then at this week’s low of $63.59. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Grain futures were solidly lower overnight on continuing U.S. ag trade worries and very good growing weather in the U.S. Corn Belt. It’s still my bias the corn and soybean markets are very close to putting in market bottoms. The bearish weather news and trade news has now been mostly factored into grain futures prices.