Friday, July 7–Jim Wyckoff’s morning markets report
On tap today is arguably the most important U.S. data point of the month: the U.S. employment situation report for June. The key non-farm payrolls number is forecast up 240,000 versus a gain of 339,000 in the May report. However, Thursday’s June U.S. ADP national employment report showed a rise of 497,000 jobs, which was double market expectations for a gain of 220,000. The ADP report has many thinking the Labor Department’s jobs report Friday morning will also be much stronger than expected.
This week’s ADP jobs report, hawkish Fed speak and FOMC minutes have moved the needle well into the reading of a Federal Reserve interest rate increase at this month’s FOMC meeting. The benchmark 10-year U.S. Treasury note yield moved above 4.0% this week, which is the highest since March. The 10-year yield is presently fetching 4.062%.
In other news, U.S. Treasury Secretary Janet Yellen is in China for meetings with high-level Chinese officials. Yellen reportedly criticized China for its treatment of U.S. companies. Her visit comes at a time when U.S.-China tensions are running very high.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are slightly up and trading around $72.00 a barrel.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading. Bulls still have the solid 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. 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 the June high of 4,498.00 and then at 4,525.00. Support for active traders is seen at this week’s low of 4,419.50 and then at 4,400.00. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are slightly weaker in early U.S. trading. Bulls still have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the June high of 15,475.50 and then at 15,600.00. On the downside, shorter-term support is seen at this week’s low of 15,111.50 and then at 15,000.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading and near Thursday’s four-month low. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9- and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 124 9/32 and then at 125 even. Shorter-term support lies at this week’s low of 123 19/32 and then at 123 even. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower and near Thursday’s contract low in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 110.24.0 and then at 111.00.0. Shorter-term technical support is seen at the contract low of 110.05.0 and then at 110.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are slightly higher in early U.S. trading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at Wednesday’s high of 1.09575 and then at 1.1000. Shorter-term support is seen at this week’s low of 1.0871 and then at 1.0800. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly higher and hit a two-week high in early U.S. trading. Bears have the slight overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $72.72 and then at $74.00. Look for sell stops just below technical support at $71.00 and then at this week’s low of $69.69. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were lower overnight. On tap today is the weekly USDA export sales report. The corn market is fully bearish, soybeans bullish and wheat neutral to bearish. These wide divergences in technical postures for the grains are very uncommon. Don’t look for them to last too long. My bias is that the bearish corn and neutral-bearish wheat markets will drag soybeans into the bearish camp soon. Weather forecasts for the U.S. Midwest have turned wetter but there are still some dry pockets in the Corn Belt.
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