Thursday, August 10–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower again overnight, amid keener risk aversion. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins.
Gold prices are higher in pre-U.S. day session trading and hit a nearly two-month high on safe-haven demand.
North Korea kept up its war talk Thursday by again threatening to unleash an “enveloping fire” in the coming weeks, with a specific target being Guam. On Tuesday U.S. President Trump said the world’s strongest military could unleash “fire and fury” on North Korea if that rogue nation keeps threatening the U.S. with nuclear missiles. The U.S. secretary of defense and secretary of state on Wednesday backed up Trump’s statement. Japan on Thursday said it would shoot down any North Korean missiles launched at Guam.
The U.S. dollar index is higher in early U.S. trading Thursday, on some safe-haven demand for the greenback. More price strength in the greenback late this week would begin to suggest a market bottom is in place for the dollar index.
Meantime, Nymex crude oil futures are modestly higher and trading just below $50.00 a barrel. The U.S.-North Korea tensions have not significantly impacted crude oil. That’s a big change from years past, when crude prices would be seriously impacted by heightened geopolitical tensions. Crude prices have paused the past week, but prices are still in an uptrend from the June low and the bulls still have the overall near-term technical advantage.
The key U.S. data point on Thursday is the July producer price index. PPI is forecast to come in at up 0.2% from June. The June reading was up 0.1%. Inflation data from around the world has been on the weak side recently. Such is going to make it harder for the world’s central banks to raise their interest rates.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are lower in early U.S. trading, on more risk aversion. Prices Tuesday hit a contract and record high. There was good follow-through selling pressure Wednesday, from Tuesday’s losses, and a bearish “key reversal” down on the daily bar char was confirmed, which suggests a market top is in place. The bulls do still have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,474.25 and then at 2,480.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,459.00 and then at 2,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
Nasdaq index September futures: Prices are lower in early U.S. trading today. The bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 5,900.00 and then at the overnight high of 5,923.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 5,861.75 and then at last week’s low of 5,856.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are slightly higher in early U.S. trading, on more safe-haven demand. Bulls have 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 bullish early today. Shorter-term technical resistance is seen at 155 even and then at 155 10/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 13/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are slightly higher in early U.S. trading, on safe-haven demand. Bulls have 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 bullish early today. Shorter-term resistance lies at this week’s high of 126.18.5 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.06.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer in early U.S. trading, on some safe-haven demand for the greenback. Bears still have the firm overall near-term technical advantage. However, more price strength this week would suggest a near-term market bottom is in place. 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 bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 93.785 and then at 94.000. Shorter-term support is seen at this week’s low of 93.120 and then at 92.580. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are firmer in early U.S. trading. Bulls still have the overall near-term technical advantage. Prices have been trending higher for six weeks. Look for buy stops to reside just above technical resistance at $50.00 and then at $50.43. Look for sell stops just below technical support at $49.00 and then at last week’s low of $48.37. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were mixed overnight. Traders will focus on today’s monthly USDA supply and demand report, and especially new corn and soybean crop-size estimates. Grain market traders are now focused on world supply and demand fundamentals, which still favor the bears.