Monday, July 9–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins.
There were no major markets-moving news developments over the weekend. Key U.S. economic data released this week includes the producer price index on Wednesday and the consumer price index on Thursday.
One worrisome development among economists in recent months is the very flat U.S. Treasury yield curve (the yield difference between the 2-year and 10-year notes) that has now fallen to a level below 0.3%. If the yield curve inverts, whereby the 2-year note yield rises above the 10-year note yield, such would strongly suggest a U.S. recession is on the horizon. The very closely watched yield curve and its potential for inverting could keep the Federal Reserve from raising U.S. interest rates as quickly as it would like—given the present stronger U.S. economic growth pace.
The key “outside markets” today find Nymex crude oil prices slightly weaker and trading around $73.50 a barrel. The U.S. dollar index is also lower as the greenback bulls have faded recently.
U.S. economic data due for release Monday includes the employment trends index and consumer credit.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a two-week high in early U.S. trading. The bulls 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 above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the June high of 2,796.00 and then at the March high of 2,814.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,761.75 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index December futures: Prices are higher and hit a two-week high in early U.S. trading. Bulls 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 above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 7,300.00 and then at the June high of 7,358.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,032.25 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are lower in early U.S. trading, on some profit taking from recent gains. Prices are still in a near-term uptrend. Shorter-term moving averages (4- 9- 18-day) are still 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 145 28/32 and then at last week’s high of 146 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at 145 even and then at last week’s low of 144 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term resistance lies at the overnight high of 120.12.5 and then at last week’s high of 120.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 119.30.0 and then at 119.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker and hit a three-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 93.740 and then at 94.000. Shorter-term support is seen at the overnight low of 93.460 and then at 93.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
August Nymex crude oil prices are slightly lower in early U.S. trading. The bulls still have the firm overall near-term technical advantage. The shorter-term moving averages are still bullish early today as the 4-day is above the 9-day. The 9-day is above with 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 the overnight high of $74.28 and then at $75.00. Look for sell stops just below technical support at $73.00 and then at $72.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were lower overnight, on corrective pullbacks from good gains last Friday. Traders will closely examine today’s weekly USDA export inspections report. Bears are still in technical command. World ag trade worries and generally good growing weather in the U.S. Corn Belt remain bearish.
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