Monday, July 15–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session beings, and at record and contract highs.
In overnight news, there was some downbeat economic news coming out of China, as its second-quarter gross domestic product rose by 6.3%, year-on-year, for the slowest growth pace in 27 years. This is leading to ideas China’s central bank will act to further stimulate the world’s second-largest economy. However, the weaker GDP report was somewhat offset by industrial production data for June that came out better than expected, at up 6.3%, year-on-year.
There were no significant developments over the weekend on the geopolitical fronts.
The key “outside markets” today see Nymex crude oil prices higher and trading just around $60.50 a barrel. The U.S. dollar index is slightly lower early today.
U.S. economic data due for release Monday is light and includes the Empire State manufacturing survey. The economic data pace really picks up the pace starting Tuesday.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer and hit another contract and record high overnight. Bulls have the solid overall near-term technical advantage. There are no early chart clues of a market top being close at hand. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,023.50 and then at 3,035.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 3,000.00 and then at 2,985.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are slightly higher and hit another contract and record high overnight. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 7,982.25 and then at 8,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,900.00 and then at 7,850.00. Sell stops are likely located 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 near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading and need to show fresh power soon. 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 the overnight high of 153 19/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 152 28/32 and then at 152 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. 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 support lies at last week’s low of 126.25.0 and then at 126.20.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Friday’s high of 127.04.5 and then at 127.10.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 96.775 and then at 97.000. Shorter-term support is seen at 96.250 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage amid a price uptrend on the daily chart. 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 last week’s high of $60.94 and then at $62.00. Look for sell stops just below technical support at $60.00 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were mixed in overnight trading. Corn was 1 to 2 cents higher, soybeans near steady and wheat around 1 to 2 cents up.
Grain traders are keenly focusing on hot and dry weather in the U.S. midsection, and more in the forecast for this week. A powerful tropical storm in the Gulf of Mexico produced some rains in the southeastern U.S. Corn Belt, but the rest of the region remains dry.
Traders are awaiting Monday afternoon’s USDA Weekly crop progress reports. Traders expect for the corn condition rating at 55 to 56% in good to excellent condition versus 57% last week. The soybean crop condition rating is seen at 51-52% good to excellent versus 53% last week. The hard red spring wheat crop condition rating is expected at 79% good to excellent compared to 78% last week.
The latest Commodity Futures Trading Commission commitments of traders data showed the big speculative “funds” long corn and wheat futures, but still short soybean futures. If the Corn Belt weather forecast remains hot and dry into next week, those funds that are short soybeans will likely be forced to buy back their sold positions which would drive soybean prices even higher.
The monthly NOPA soybean crush report will be released later today. Traders estimate the June crush around 154 million bushels, which is about the same as in June’s 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