Monday, August 26–Jim Wyckoff’s Morning Markets Report
The unexpected twists and turns in the U.S.-China trade war continue, as President Trump early Monday morning said Chinese trade officials called U.S. trade officials Sunday evening to restart discussions. Trump said China “wants to make a deal” and “that’s a great thing.” Markets in Asia and European were under selling pressure early on, until the Trump news hit the news wires and turned the stock markets that were still open around. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Chinese officials appeared a bit murky on the matter of the phone call, however. The surprise news Monday comes after Trump on Friday unleashed a barrage of negative tweets on China, including “demanding” that U.S. businesses leave there.
The weekend G-7 summit in Paris produced nothing major that the marketplace deemed as price-sensitive. Trump had a chance to meet with Iran’s foreign minister who showed up unexpectedly, but declined to do so.
Civil unrest in Hong Kong escalated over the weekend, including clashes between police and protestors. The world marketplace continues to closely monitor the situation.
In other overnight news, the closely watched German Ifo business conditions index in August fell to 94.3 versus expectations of a reading of 95.1.
The key “outside markets” today see Nymex crude oil prices firmer and trading around $54.50 a barrel. The U.S. dollar index is solidly higher.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, durable goods orders and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading after hitting a three-week low in overnight trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,888.50 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,850.00 and then at the overnight low of 2,811.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
December Nasdaq index futures: Prices are higher in early U.S. trading after hitting a three-week low early on. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 7,641.75 and then at 7,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,550.00 and then at 7,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher and hit a contract high in early U.S. trading. Bulls 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 bullish early today. Shorter-term technical resistance is seen at 166 even and then at the contract high of 166 22/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 164 14/32 and then at 164 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher and hit a contract high in early U.S. trading. Bulls 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 early today. Shorter-term support lies at the overnight low of 131.14.5 and then at 131.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 132.00.0 and then at the contract high of 132.09.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 97.750 and then at last week’s high of 97.950. Shorter-term support is seen at the overnight low of 96.960 and then at 96.735. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
October Nymex crude oil prices are firmer in early U.S. trading. Bears have the slight overall near-term technical advantage amid a six-week-old price downtrend still in place on the daily bar chart. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $55.00 and then at $56.00. Look for sell stops just below technical support at $54.00 and then at $53.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mostly firmer in overnight trading. Corn was up around 2 to 3 cents, soybeans up about 13 cents and wheat steady to 1 cent up. The overnight news that President Trump said China wants to come back to the trade-negotiation table has boosted the grains, after they were pressured late last week on negative comments coming from Trump Friday. However, grain market traders are not putting too much faith in the early-week upturn in U.S.-China trade-talk sentiment.
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