Friday, August 4–Jim Wyckoff’s morning markets report
Asian and European stock markets were mixed in overnight trading. U.S. stock indexes are pointed to slightly higher openings when the New York day session begins. Trader and investor appetite has been dinged this week by the Fitch downgrade of U.S. government debt and by downbeat quarterly earnings from Apple, reported after the close Thursday.
Traders are awaiting the U.S. data point of the week on Friday: the U.S. employment situation report for July. The key non-farm payrolls number is expected to come in at up 200,000 jobs, compared to a rise of 209,000 in the June report.
A feature in the marketplace this week is the sell off in the U.S. Treasury market (prices falling and yields rising). Treasury yields have hit their highest levels of the year this week. It could be that the downgrade of the U.S. government’s credit rating played a part in the bond market rout. However, yields have been steadily rising the past few months, but did accelerate this week. Some market watchers worry that inflationary pressures could heat up again, while at the same time the U.S. economy sees its highly anticipated (at least by some) slowdown. That scenario raises the specter of the dreaded “stagflation,” which means problematic inflation and slowing economic growth. That scenario is an outlier right now but cannot be ruled out.
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls still have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 4,575.00 and then at 4,600.00. Support for active traders is seen at this week’s low of 4,505.75 and then at 4,475.00. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls still have the firm 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 the overnight high of 15,562.50 and then at 15,789.75. On the downside, shorter-term support is seen at this week’s low of 15,339.50 and then at 15,200.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly up on tepid short covering after hitting a contract low on Thursday. 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 bearish early today. Shorter-term technical resistance is seen at 121 even and then at 122 even. Shorter-term support lies at the contract low of 120 3/32 and then at 119 even. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are lower and hit a 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at Thursday’s high of 110.27.0 and then at Wednesday’s high of 111.07.5. Shorter-term technical support is seen at the contract low of 110.03.0 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 near steady in early U.S. trading. Prices are in a fledgling downtrend on the daily bar chart. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at Wednesday’s high of 1.1043 and then at this week’s high of 1.1072. Shorter-term support is seen at this week’s low of 1.0935 and then at 1.0900. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly up in early U.S. 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 bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $82.43 and then at $84.00. Look for sell stops just below technical support at $80.00 and then at this week’s low of $78.69. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were higher in overnight trading, on more short covering from this week’s losses. Weather in the Midwest still leans bearish for corn and soybeans. However, the Russia-Ukraine war has heated up this week, including Russia attacking grain facilities in Ukraine, and that is prompting some short covering and perceived bargain hunting late this week.
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