Friday, July 2–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. Chinese shares were under pressure late this week after China’s Premiere Xi Jinping gave a very hawkish speech Thursday in conjunction with the 100th birthday of the Communist party. The U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Traders are awaiting Friday morning’s employment situation report for June from the Labor Department—arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 700,000 compared to a rise of 559,000 in May. The unemployment rate is seen at 5.6% versus 5.8% in May. A significant miss from market expectations would likely cause some higher volatility in some markets, in the immediate aftermath of the report’s release.
In overnight news, the Euro zone May producer price index came in at up 1.3% from April and up 9.6% year-on-year. Those numbers were in line with market expectations but are running hotter than Euro zone PPI numbers seen in recent months.
The key outside markets early today see the U.S. dollar index slightly higher and hitting a three-month high overnight. Nymex crude oil futures are slightly lower and trading around $75.00 a barrel after hitting a 2.5-year high of $76.22 Thursday. Energy traders are still awaiting the results of this week’s OPEC meeting, which extended into Friday. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 1.446%.
Other U.S. economic data due for release Friday includes the international trade report and manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading and poked to another contract and record high overnight. Bulls 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 and 18-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 the contract high of 4,318.25 and then at 4,350.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,269.25 and then at 4,250.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are slightly up in early U.S. trading and near this week’s contract and record high. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract high of 14,606.25 and then at 14,700.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at Thursday’s low of 14,471.00 and then at this week’s low of 14,333.25. Sell stops likely reside 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 higher in early U.S. trading. A price uptrend is in place on the daily chart and bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 161 16/32 and then at 162 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 160 13/32 and then at 160 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher 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 132.18.0 and then at 132.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.09.5 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are lower in early U.S. trading and hit a three-month low overnight. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at 1.1900 and then at this week’s high of 1.1963. Buy stops likely reside just above those levels. Shorter-term support is seen at 1.1800 and then at 1.1750. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are near steady in early U.S. trading. Prices Thursday hit a 2.5-year high of $76.22. Bulls have the solid overall near-term technical advantage. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $75.54 and then at $76.22. Look for sell stops just below technical support at $74.00 and then at Thursday’s low of $73.39. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are firmer in early U.S. pre-market trading. Grain market bulls have had a very good week, heading into the holiday weekend. Weather in the U.S. Corn Belt is forecast to be generally warmer and drier up to mid-July and that’s bullish. However, there are not yet any forecasts for the very bullish “heat dome” scenario over the Corn Belt. Importantly, the period right after the Fourth of July holiday can be pivotal for the grain markets. Price trends can reverse or accelerate during this critical period.
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