Tuesday, August 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to lower overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, on tepid corrective bounces after Monday’s big sell offs. Traders and investors early this week are concerned about a still-aggressive Federal Reserve that is fighting problematic price inflation by raising U.S. interest rates at a rapid pace–even if it causes a U.S. economic recession. A Wall Street Journal news headline read: “Wall Street swings from greed to fear as the Fed’s message sinks in.” The marketplace is awaiting the late-week Jackson Hole, Wyoming Federal Reserve annual symposium, including a speech from Fed Chairman Jerome Powell Friday morning. Past Jackson Hole Fed meetings have significantly moved markets.
In overnight news, the Chinese currency, the yuan, fell to a two-year low against the U.S. dollar, following recent weak Chinese economic data and China’s interest rate cuts.
The Euro zone’s August manufacturing purchasing managers index (PMI) was 49.7 versus 49.8 in July. The August PMI was just above market expectations. The August services PMI was 50.2 versus 51.2 in July. A reading below 50.0 suggests contraction in the sector.
The key outside markets today see Nymex crude oil prices higher and trading around $92.00 a barrel. The U.S. dollar index is firmer and hit a nearly 20-year high in early U.S. trading. The surging greenback is denting bullish enthusiasm in many raw commodity markets, as they are priced in U.S. dollars on the world market. The appreciating greenback is making those commodities more expensive to purchase in non-U.S. currency. Meantime, the yield on the 10-year U.S. Treasury note is fetching 3.016%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail reports, the flash manufacturing and services PMIs, the Richmond Fed business survey and new residential sales.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls have faded recently as a price uptrend on the daily chart has been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below 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 4,200.00 and then at Monday’s high of 4,221.50. Support for active traders is seen at 4,100.00 and then at 4,080.00. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are slightly up in early U.S. trading. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 13,000.00 and then at 13,100.00. On the downside, shorter-term support is seen at the overnight low of 12,823.50 and then at 12,700.00. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are firmer in early U.S. trading. Prices are in a downtrend on the daily bar chart. 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 bearish early today. Shorter-term technical resistance is seen at Monday’s high of 138 16/32 and then at 139 even. Shorter-term support lies at Monday’s low of 137 6/32 and then at 136 10/32. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are firmer in early U.S. trading. Prices are trending down on the daily bar chart. 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 bearish early today. Shorter-term resistance lies at Monday’s high of 118.17.5 and then at 119.00.0. Shorter-term technical support lies at Monday’s low of 117.25.0 and then at 117.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The December Euro currency futures are weaker and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage. 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 1.0100 and then at Monday’s high of 1.0131. Shorter-term support is seen at .9950 and then at .9900. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. Bears have the overall near-term technical advantage as prices are still trending down, but now just barely. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $94.00 and then at $95.00. Look for sell stops just below technical support at $90.00 and then at $88.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures were solidly higher overnight, on short covering and perceived bargain hunting. Corn and soybean bulls have regained some upside momentum recently, with wheat in a follower’s mode. The focus of grain traders this week is on the Pro Farmer annual corn and soybean crop tour.
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