Tuesday, June 18–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly firmer overnight. The U.S. stock indexes are also pointed toward slightly higher openings when the New York day session begins.
Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today.
The Federal Open Market Committee (FOMC) meeting begins this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. The Bank of Japan also holds its regular monetary policy meeting this week.
Meantime, the yield on the benchmark German government 10-year bond fell to a record low of -0.299% today. World government bond yields are declining amid very low inflationary pressures in major economies and on slowing world economic growth.
Geopolitics is still near the front burner of the marketplace this week. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon.
The price of Bitcoin has surpassed $9,000 this week and hit a 13-month high. Facebook is launching its own crypto currency, which gives the cryptos more legitimacy.
The key “outside markets” today see Nymex crude oil prices weaker and trading around $51.50 a barrel. Meantime, the U.S. dollar index is firmer in early U.S. trading.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and new residential construction.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are up in early U.S. trading. Bulls have the firm 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 to bullish early today. Today, shorter-term technical resistance comes in at the June high of 2,915.75 and then at 2,930.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,889.00 and then at last week’s low of 2,871.50. 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. Bulls have the firm 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 and 18-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 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 7,600.00 and then at the overnight low of 7,541.75. 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 solidly up 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 technical resistance is seen at the overnight contract high of 155 16/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at 155 even and then at the overnight low of 154 14/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
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 127.06.5 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight contract high of 127.22.5 and then at 127.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
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 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 97.260 and then at 97.500. Shorter-term support is seen at the overnight low of 96.885 and then at 96.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly weaker in early U.S. trading. Bears have the overall near-term technical advantage. A price downtrend is still in place on the daily chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at the this week’s high of $52.74 and then at $53.45. Look for sell stops just below technical support at $51.00 and then at the June low of $50.60. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures prices were lower overnight, with corn down around 7 cents, soybeans off around 2 cents and wheat down around 12 cents. Profit taking from recent gains and a normal corrective pullback are featured early today after recent solid gains in all three markets. Weekly USDA crop progress reports issued Monday afternoon showed U.S. corn planting at 92% complete versus 83% last week. Soybean planting was 77% complete compared to 60% last week. The soybean number was a bit less than expected and has limited the selling pressure in soybeans so far today. Weather is still bullish for the grains. Wetter and cooler than normal conditions are forecast for much of the U.S. Midwest for the next week. It’s past mid-June and planting corn or soybeans this late is not a good option for most farmers.
Tuesday’s NOPA soybean crush report showed the May soybean crush at 154.8 million bushels, which was less than expected and compares to 160 million bushels crushed in April. U.S. soybean oil stocks fell to 1.581 billion pounds from 1.787 billion lbs. last month Soybean meal stocks were 617,318 tons in May versus 763,203 in April.
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