U.S.-North Korea Tensions Dominating World Marketplace

Friday, August 11–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower again overnight, amid the heightened trader and investor anxiety in the marketplace. The U.S.-North Korea tensions have not receded and escalated a bit Thursday as U.S. President Trump again warned North Korea that any military action by that regime against a U.S. friend would prompt a massive response from the U.S. He also said Thursday his previous “fire and fury” statement maybe was not tough enough. Some are calling this matter then next Cuban missile crisis. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins.

Gold prices are modestly higher and hit a two-month high overnight, on continued safe-haven demand that has occurred this week. Noted investor Ray Dalio is reportedly advising investors to have 5% to 10% of their investment portfolio in gold.

U.S. Treasuries are also seeing increased safe-haven demand this week.

The U.S. dollar index is modestly higher in early U.S. trading Friday, on some mild safe-haven demand for the greenback. However, the dollar index has not yet been significantly impacted by the U.S.-North Korea face-off.

Nymex crude oil futures are modestly lower in early U.S. trading. The International Energy Agency has revised down its world oil demand estimate. The IEA also estimated that OPEC members’ compliance to their production quotas is only about 75%.

The key U.S. data point on Friday is the July consumer price index. CPI is forecast to come in at up 0.2% from June. The June reading was at 0.0%. Inflation data from around the world has been on the weak side recently. Such is going to make it harder for the world’s central banks to raise their interest rates.

Other U.S. economic data due for release Friday includes real earnings.

–Jim

U.S. STOCK INDEXES

S&P 500 September e-mini futures: Prices are lower and hit a four-week low in early U.S. trading, on more risk aversion. A bearish “key reversal” down on the daily bar chart has occurred this week, which suggests a market top is in place. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at 2,450.00 and then at 2,460.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,425.00 and then at 2,415.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0

Nasdaq index September futures: Prices are lower and hit a four-week low in early U.S. trading today. The bulls still have the overall near-term technical advantage, but are fading badly. A bearish weekly low close today would suggest a near-term market top is in place. 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 5,800.00 and then at 5,825.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,761.00 and then at 5,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher and hit a six-week high in early U.S. trading, on more safe-haven demand. Bulls have the firm 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 155 23/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 14/32 and then at 155 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 and hit a six-week high in early U.S. trading, on more safe-haven demand. Bulls have the solid 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 bullish early today. Shorter-term resistance lies at 127.00.0 and then at the June high of 127.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.20.0 and then at 126.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5

U.S. DOLLAR INDEX

The September U.S. dollar index is near steady in early U.S. trading. Bears still have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 93.785 and then at 94.000. Shorter-term support is seen at this week’s low of 93.120 and then at 92.580. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

September Nymex crude oil prices are weaker in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded a bit recently. Prices have been trending sideways for two weeks. Look for buy stops to reside just above technical resistance at $49.00 and then at $50.00. Look for sell stops just below technical support at the overnight low of $48.01 and then at $47.50. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Grain futures markets were mixed overnight. Thursday’s monthly USDA supply and demand report was bearish and sunk the grain markets. Grain market bears are in firm technical control.