Tuesday, July 2–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Look for trading activity in the U.S. to start to die down today, ahead of the U.S. Independence Day holiday on Thursday.
After having some time to reflect upon the weekend summit meeting on trade between U.S. President Trump and China President Xi, the marketplace is not quite so upbeat on the prospects of a final agreement any time soon. There is speculation now that a deal won’t get done ahead of the 2020 U.S. presidential election. Furthermore, there was some downbeat U.S. manufacturing data released Monday and the Trump administration is again threatening the European Union with trade tariffs.
In overnight news, the Reserve Bank of Australia cut its main interest rate for the second month in a row, and the central bank said more cuts may be needed.
The Euro zone reported its May producer price index dropped 0.1% from April and was up 1.6%, year-on-year. Those numbers were in line with expectations but underscore the low inflation gripping many of the world’s major economies. The yield on the German 10-year government bonds (bunds) hit a new record low today.
There was some civil unrest in the streets of Hong Kong on Monday, but that has fallen out of the TV news cycle, which suggests that situation has calmed down.
The key “outside markets” today see Nymex crude oil prices slightly lower and trading just below $59.00 a barrel. Meantime, the U.S. dollar index is modestly down in early U.S. trading.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales report, the ISM New York report on business, the IBD/TIPP economic optimism index, and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly weaker after hitting a contract high on Monday. 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. 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 2,981.75 and then at 3,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’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: 5.0
September Nasdaq index futures: Prices are slightly down in early U.S. trading after hitting a two-month high on Monday. Bulls have the strong 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 7,726.00 and then at 7,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Monday’s high of 155 21/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 154 22/32 and then at last week’s low of 154 18/32. 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. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 127.23.0 and then at Monday’s low of 127.17.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 128.00.0 and then at the contract high of 128.08.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker 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 early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.455 and then at 96.705. Shorter-term support is seen at the overnight low of 96.185 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly lower in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $60.00 and then at Monday’s high of $60.28. Look for sell stops just below technical support at Monday’s low of $58.34 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures prices were mixed overnight. Corn is up around 1 cent, soybeans up around 4 cents and wheat down 1 to 2 cents. The grain market bulls are trying to stabilize prices following their recent downdrafts that have produced near-term technical damage in corn and wheat futures by negating their price uptrends on the daily charts. Traders are now reckoning last Friday’s USDA acreage numbers are not at all accurate and are nearly completely discounting them, as USDA will re-survey farmers and put out new acreage numbers in the August monthly crop report. The grain markets are also giving a not-so-positive read to last weekend’s U.S.-China summit meeting between Presidents Trump and Xi. While China has said it will buy more U.S. ag products going forward, “the proof will be in the pudding.” Weather in the midwest U.S. now favors the bears, as drier and warmer conditions last weekend and more of the same in the coming days will greatly benefit the U.S. crops. Corn and soybean futures to some slight support as Monday afternoon’s weekly USDA crop progress reports showed crop conditions slightly below trader expectations. Trading later this week could be extra important. Historically, the first trading day for the grains after the U.S. Independence Day, which comes this Friday, is pivotal. Grain price trends can be reversed or existing trends accelerate during the critical early-July timeframe. Grain traders will closely examine today’s weekly USDA export inspections 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