Wednesday, July 3–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Look for trading activity in the U.S. to tail off quickly today, ahead of the U.S. Independence Day holiday on Thursday, when U.S. markets are closed. However, today is a very busy day for U.S. economic data releases.
European stock markets were buoyed by news the International Monetary Fund’s Christine Lagarde has been nominated to be the next president of the European Central Bank. Lagarde is considered a monetary policy dove, like current ECB president Mario Draghi.
Gold prices are sharply higher in early U.S. trading on some safe-haven demand and on ideas of an easier monetary policy coming from the U.S. Federal Reserve. President Trump on Tuesday said he will nominate a couple of likely dovish candidates to serve on the Federal Reserve Board.
The yield on the German 10-year government bond (bund) dropped to another record low Wednesday, at minus 0.394%.
The key “outside markets” today see Nymex crude oil prices modestly up and trading around $56.50 a barrel. Meantime, the U.S. dollar index is slightly higher in early U.S. trading.
Traders and investors are looking ahead to Friday morning’s June U.S. jobs report from the Labor Department. The key non-farm payrolls number of the report is expected to show a rise of 165,000.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Challenger job-cuts report, the ADP national employment report, the weekly jobless claims report, the international trade report, the U.S. services PMI, the ISM non-manufacturing index, manufacturers’ shipments and orders, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a 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 bullish early today. Today, shorter-term technical resistance comes in at 3,000.00 and then at 3,015.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,955.50 and then at 2,930.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.0
September Nasdaq index futures: Prices are firmer and hit a two-month 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 neutral early today. Shorter-term technical resistance is seen at the contract high of 7,910.75 and then at 7,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,824.50 and then at this week’s low of 7,773.00. Sell stops are likely located 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 and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage. There are no early chart clues to suggest a market top is close at hand. 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 contract high of 156 25/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 5/32 and then at 156 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
September U.S. T-Notes: Prices are higher and hit a contract high in early U.S. trading. 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 support lies at the overnight low of 128.04.5 and then at 128.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the contract high of 128.14.0 and then at 128.20.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady in early U.S. trading. 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 96.455 and then at 96.705. Shorter-term support is seen at Tuesday’s low of 96.150 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
August Nymex crude oil prices are firmer in early U.S. trading. Bulls still have the slight overall near-term technical advantage but faded Tuesday. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $57.00 and then at $58.00. Look for sell stops just below technical support at the overnight low of $56.04 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were firmer overnight as the bulls try to stabilize their flagging markets. Corn is up 3 to 6 cents, soybeans up 3 to 4 cents and wheat up 2 to 4 cents. The recent price downdrafts have produced serious near-term technical damage in corn, soybean and wheat futures by negating their price uptrends on the daily charts. Weather in the midwest U.S. remains bearish amid timely rains and sunny, warm conditions—and more of the same in the forecasts. However, the corn and soybean crops are off to generally very late starts and need a near-perfect growing season to reach USDA “trend-line” yields. There is at least one weather forecaster now calling for a U.S. Midwest growing season that will not be extended this fall, due to likely cooler weather setting in earlier. Focus is also on demand for U.S. grains, which is presently tepid. China has again promised to buy more U.S. ag products, but traders want to see actual sales. Trading on Friday could be extra important. Historically, the first trading day for the grains after the U.S. Independence Day holiday can be pivotal. Grain price trends can be reversed or existing trends accelerate during the critical early-July timeframe.
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