Tuesday, July 23–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings. This is a big week for U.S. corporate earnings reports.
Traders and investors are in upbeat moods on Tuesday. Reports say President Trump met with U.S. technology companies Monday at the White House, regarding easing U.S. sanctions on China’s big communications firm, Huawei. This is being deemed a big positive on the U.S.-China trade front, suggesting the U.S. wants to move the negotiations forward.
Also, the U.S. Congress and the Trump administration have agreed on a government spending deal, to avoid a government shutdown anytime soon.
The marketplace is not seeing much lingering reaction to weekend news Iran’s military seized a British oil tanker near the Strait of Hormuz, apparently in response to the U.K. capturing an Iranian vessel a couple weeks ago. Still, Iran’s confrontation with the U.S. and the U.K. sees a high probability of escalating in the coming weeks.
Just over the horizon: the European Central Bank holds its regular monetary policy meeting on Thursday. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting. Both central banks are expected to ease their monetary policies at the meetings.
The key “outside markets” today see Nymex crude oil prices higher and trading around $56.25 a barrel. Meantime, the U.S. dollar index is solidly higher today.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the Richmond Fed business survey, and existing home sales.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. 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 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 neutral early today. Today, shorter-term technical resistance comes in at 3,010.00 and then at the contract high of 3,023.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,969.50 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading, and not far below last week’s record high. Bulls have the solid overall near-term technical advantage. 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 7,980.00 and then at the contract high of 8,001.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at last week’s low of 7,815.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly down in early U.S. trading. Bulls have the firm 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Monday’s high of 155 11/32 and then at 155 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 154 16/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly down in early U.S. trading. Bulls have the firm overall 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term support lies at Monday’s low of 127.11.0 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Monday’s high of 127.22.0 and then at last week’s high of 127.27.5. 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 higher and hit a five-week high in early U.S. trading. Bulls have the firm 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 bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.265 and then at 97.500. Shorter-term support is seen at the overnight low of 96.985 and then at Monday’s low of 96.785. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
September Nymex crude oil prices are weaker in early U.S. trading. Bulls have faded recently as a price uptrend on the daily chart was negated last week. The shorter-term moving averages are 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 bearish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $57.04 and then at $57.50. Look for sell stops just below technical support at the July low of $54.85 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures prices were firmer in overnight trading. Corn was up 2 to 3 cents, soybeans up 2 to 3 cents, and wheat 3 to 4 cents higher. It’s a “Turnaround Tuesday” phenomenon in the grain markets, following Monday’s solid losses.
Bullish U.S. grain traders are encouraged by reports President Trump met with U.S. technology companies Monday at the White House, regarding easing U.S. sanctions on China’s big communications firm, Huawei. This is being deemed a big positive on the U.S.-China trade front, suggesting the U.S. wants to move the negotiations forward.
Midwest U.S. weather has turned benign for the corn and soybean crops, and that still favors the bearish camp. The
lower temperatures this week will aid the critical “pollination” growth phase of the U.S. corn crop.
USDA weekly crop progress data released Monday afternoon showed the U.S. corn condition rating at a lower-than-expected 57% in the good to excellent categories versus 58% last week. The U.S. soybean condition rating was 54% good to excellent, which is unchanged from last week’s USDA reading and in line with market expectations. The U.S. spring wheat condition ratings were 76% good to excellent, which was in line with trader expectations. These USDA weekly readings slightly favor the bullish camp.
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