Friday, August 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Risk appetite is more upbeat to start the last trading day of the week.
The U.S. stock market got a boost in afternoon trading Thursday when reports hit the wires that European Central Bank rate-setting official Olli Rehn said the ECB will be rolling out new economic stimulus measures in September. The U.S. fed funds futures market now shows a 100% chance the Federal Reserve will lower its key interest rate in September. Asian and European stock markets also saw gains Friday due in part to the ECB news.
On the U.S.-China trade war front, President Trump late Thursday said he will be talking to his counterpart, President Xi, “soon.” Trump also made comments that could be construed as both negative and positive regarding progress on resolving the dispute.
The key “outside markets” today see Nymex crude oil prices higher and trading around $55.50 a barrel. The U.S. dollar index is modestly higher.
U.S. economic data due for release Friday includes new residential construction and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy trading. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at 2,900.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,849.50 and then at this week’s low of 2,817.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 7,650.00 and then at 7,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,502.50 and then at 7,450.00. 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 lower on normal profit taking after hitting a contract high Thursday. Bulls still 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 neutral to bearish early today. Shorter-term technical resistance is seen at 166 even and then at the overnight high of 166 6/32. Buy stops likely reside just above those levels. Shorter-term support lies at Thursday’s low of 164 17/32 and then at 164 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are weaker on normal profit taking after hitting a contract high Thursday. Bulls still 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 with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at the overnight low of 130.20.4 and then at Thursday’s low of 130.11.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 131.03.0 and then at the contract high of 131.10.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is higher and hit a two-week high in early U.S. trading. Bulls have the solid 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 and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.170 and then at 98.445. Shorter-term support is seen at the overnight low of 97.990 and then at Thursday’s low of 97.680. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading. Bears still have the overall near-term technical advantage amid a four-week-old price downtrend in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-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 the overnight high of $55.67 and then at $56.00. Look for sell stops just below technical support at the overnight low of $54.69 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were firmer in overnight trading. Corn was up around 3 cents, soybeans up around 5 cents and wheat up about 2 cents. The grain market bulls are benefiting a bit late this week on an uptick in trader and investor risk appetite, as evidenced by solid gains in the U.S. stock indexes in pre-U.S.-open trading. It could also be that the grain markets have now factored in all the bearish news of late—namely Monday’s USDA report and the benign U.S. Corn Belt weather.
The U.S. stock market got a boost in afternoon trading Thursday when reports hit the wires that European Central Bank rate-setting official Olli Rehn said the ECB will be rolling out new economic stimulus measures in September. The U.S. fed funds futures market now shows a 100% chance the Federal Reserve will lower its key interest rate in September. Asian and European stock markets also saw gains Friday due in part to the ECB news. Theoretically, the stimulus from the central banks should increase demand for grains worldwide. The flip-side is that the monetary policy easing is due to slowing world economic growth. Thus, the tepid response from the grain markets.
On the U.S.-China trade war front, President Trump late Thursday said he will be talking to his counterpart, President Xi, “soon.” Trump also made comments that could be construed as both negative and positive regarding progress on resolving the dispute. Grain traders have gotten mostly numb to all the rhetoric coming from both sides.
Corn Belt weather remains non-threatening for the US corn and soybean crops. It’s mid-August and the window is rapidly closing on any heat/dry stress developing for the soybean and corn crops. The next major weather threat would be an early frost in the Corn Belt that could reduce corn and soybean yields. However, some weather forecasters are now calling for a warmer-than-normal autumn.
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