Wednesday, July 7–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly firmer overnight. The U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, with the S&P and Nasdaq at or near record highs. Traders are awaiting Wednesday afternoon’s release of the minutes of the June FOMC meeting, hoping for clues on the timing of the Fed’s policy moves that are likely to be gradual tightening of monetary policy in the coming months. There are also growing ideas that the FOMC minutes this afternoon may not be as hawkish as some market watchers expect.
In overnight news, the European Union forecast Euro zone inflation in 2021 at 1.9% and in 2022 at 1.4%. Both numbers are up just slightly from the EU’s last forecast, but still not close to being problematic. Other inflation reports, however, have seen hotter Euro zone inflation than the EU is forecasting.
The key outside markets early today see the U.S. dollar index slightly lower. Nymex crude oil futures are higher and trading around $74.75 a barrel. Prices Tuesday hit a 6.5-year high of $76.98. Energy traders are trying to assess the recently concluded OPEC meeting that ended in disagreement with no changes to oil output. Saudi Arabia and the United Arab Emirates are in sharp disagreement on the UAE’s production level. Such could unravel the oil cartel down the road and could lead to all-out pumping by the cartel members. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 1.35%. Treasury yields have been falling recently and this week hit a four-month low.
Other U.S. economic data due for release Wednesday includes the weekly chain store sales index and the Johnson Rebook retail sales report, the MBA mortgage applications survey, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading and near Tuesday’s contract and record high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 4,348.00 and then at 4,375.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Tuesday’s low of 4,305.25 and then at 4,280.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are up in early U.S. trading and hit another contract and record high. 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 neutral to bullish early today. Shorter-term technical resistance is seen at 14,900.00 and then at 15,000.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 14,754.00 and then at Tuesday’s low of 14,625.25. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. A price uptrend is in place on the daily chart and bulls have momentum and the 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 bullish early today. Shorter-term technical resistance is seen at the June high of 163 2/32 and then at 163 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 7/32 and then at 162 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 in early U.S. trading and hit a four-month high overnight. 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 bullish early today. Shorter-term resistance lies at the overnight high of 133.16.0 and then at 133.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133.06.5 and then at 133.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are slightly lower in early U.S. trading. Prices Tuesday hit a three-month low. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-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 this week’s high of 1.1911 and then at 1.1950. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1820 and then at 1.1800. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 early today. Look for buy stops to reside just above technical resistance at $75.00 and then at $76.00. Look for sell stops just below technical support at $74.00 and then at this week’s low of $72.94. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures were higher overnight on corrective bounces after Tuesday’s sharply lower to limit-down trade following the three-day U.S. holiday weekend. Grain market bulls suffered a major blow Tuesday as the renewed weather market quickly fizzled. Very good amounts of rainfall are forecast for the U.S. Corn Belt over the next week—right during the key pollination phase of growth for much of the corn crop. Don’t be surprised if the big “fund” traders this week set up big short positions in the grains.
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