Thursday, August 10–Jim Wyckoff’s morning markets report
A Wall Street Journal headline today reads: “China slips into deflation in warning sign for World economy.” This follows a 0.3% drop in China’s consumer price index in July.
Another WSJ headline today reads: Sputtering trade fuels concerns about a fractured global economy.” This headline follows downbeat China import and export numbers reported earlier this week.
The summertime rally in the U.S. stock market has hit a speed bump, gold and silver prices have dipped, while grain markets have also sold off—all due in part to the slowing Chinese economy creating concerns about less demand for global supplies.
Look for China’s central bank to continue to implement economic stimulus measures in the coming weeks, in an effort to prop up the listing Chinese economy. Importantly, if the stimulus does not put a charge into the Chinese economy in the coming few months, the other major economies of the world will start to feel the sting of the slower China growth. Such a scenario would be significantly bearish for raw commodity markets, as China is a voracious consumer of raw commodities. Global stock and financial markets would also likely be negatively impacted by a weakening of the Chinese economy.
In the coming weeks, keep a closer eye on economic data coming out of China—because the “smart money” in the marketplace will be doing the same and acting upon that data.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly Treasury budget statement.
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 this week’s high of 4,541.00 and then at 4,560.75. Support for active traders is seen at this week’s low of 4,478.25 and then at 4,450.00. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have the near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 15,497.75 and then at 15,610.25. On the downside, shorter-term support is seen at this week’s low of 15,146.50 and then at 15,100.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are near steady 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 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 technical resistance is seen at this week’s high of 123 5/32 and then at 124 even. Shorter-term support lies at 122 even and then at this week’s low of 121 1/32. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are near steady in early U.S. trading. 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 neutral to bullish early today. Shorter-term resistance lies at this week’s high of 111.22.0 and then at 112.00.0. Shorter-term technical support is seen at Tuesday’s low of 110.31.0 and then at this week’s low of 110.23.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The September Euro currency futures are higher in early U.S. trading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.1072 and then at 1.1100. Shorter-term support is seen at the overnight low of 1.0986 and then at last week’s low of 1.0935. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly weaker but did hit an 11-month high in overnight trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $85.00 and then at $86.00. Look for sell stops just below technical support at Wednesday’s low of $82.67 and then at $81.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were higher in overnight trading, on short covering. Weather in the Midwest leans a little friendlier for corn and soybean prices. Warmer temps and less precip are in the forecast for the Corn Belt for most of the next 10 days. The data point of the week for the grain markets is Friday’s USDA monthly supply and demand report. Look for active trading in the immediate aftermath of that report.
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