Friday, July 20–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed overnight, with European shares mostly down and Asian shares mostly up. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
The Chinese yuan currency hit another 12-month low against the U.S. dollar today after the Chinese central bank guided its currency down by 0.9%–the largest single-move depreciation against the dollar in two years. The yuan has declined by 2.3% against the greenback in July.
The marketplace is still buzzing about the CNBC interview with President Donald Trump, in which he criticized the Federal Reserve for raising interest rates. Trump said he is “not thrilled” about the recent U.S. interest rate hikes and is worried the progress his administration has made on the U.S. economy could be undone by higher rates. Trump also implied a stronger U.S. dollar could be disadvantageous for U.S. foreign trade. Still, he called Fed Chairman Jerome Powell a good man for the job. The U.S. dollar was pressured on the news, U.S. Treasuries rallied and gold and silver prices pared losses.
The key “outside markets” today find Nymex crude oil prices modestly up and trading just below $68.00 a barrel. Meantime, the U.S. dollar index is slightly lower today, on a corrective pullback after hitting a 12-month high on Thursday.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are modestly lower in early U.S. trading, on profit taking after hitting a five-month high Wednesday. The bulls still have the firm 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 bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,818.25 and then at 2,840.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,789.75 and then at 2,773.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index December futures: Prices are slightly higher early today. 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 and 18-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 7,407.00 and then at the contract high of 7,437.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,350.75 and then at 7,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are slightly weaker in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 145 16/32 and then at this week’s high of 145 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at 145 even and then at this week’s low of 144 12/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly lower in early U.S. trading. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Thursday’s high of 120.13.5 and then at the July high of 120.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 120.07.0 and then at 120.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading, after hitting a contract high on Thursday. 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. The 9-day is above 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 the overnight high of 95.095 and then at the contract high of 95.440. Shorter-term support is seen at the overnight low of 94.785 and then at 94.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have regained some momentum late this week. The shorter-term moving averages are still bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 the overnight high of $70.45 and then at this week’s high of $70.87. Look for sell stops just below technical support at $69.00 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were mixed again in overnight trading. Not much new. Corn and soybean market bears remain in technical command. However, bullish weekly high closes today in those markets would be a solid clue that they have bottomed out. Wheat has stabilized on ideas of a shorter world wheat crop this year.
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