Thursday, July 18–Jim Wyckoff’s Morning Markets Report
Asian and European stocks were mostly weaker overnight, on some disappointing earnings reports. U.S. stock indexes are pointed toward weaker openings when the New York day session beings, on some mild profit taking after hitting record and contract highs earlier this week.
There are also declining expectations the U.S. and China can come to a trade agreement anytime soon, following recent downbeat rhetoric coming from both sides. Reports just out say China is demanding that the U.S. ease restrictions on its technology giant, Huawei. This situation has put a bit of a damper on global stock market bulls.
The key “outside markets” today see Nymex crude oil prices firmer and trading just below $57.00 a barrel. Meantime, the U.S. dollar index is slightly down.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage as prices are not far below this week’s record highs. 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 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at 3,000.00 and then at the contract high of 3,023.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,974.50 and then at 2,963.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are slightly lower and not too far below this week’s contract and record high. 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 to bearish early today. Shorter-term technical resistance is seen at 7,900.00 and then at Wednesday’s high of 7,966.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,833.00 and then at 7,800.00. 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 slightly down in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 155 5/32 and then at 155 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 154 16/32 and then at 154 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly down in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at 127.08.0 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.18.5 and then at 127.23.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher in early U.S. trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is above 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 this week’s high of 97.100 and then at the July high of 97.195. Shorter-term support is seen at the overnight low of 96.700 and then at this week’s low of 96.375. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
August Nymex crude oil prices are higher in early U.S. trading, on a corrective bounce from strong losses this week. Bulls still have the overall near-term technical advantage but a price uptrend on the daily chart is now in serious jeopardy. The shorter-term moving averages are neutral early today as the 4-day is below 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 early today. Look for buy stops to reside just above technical resistance at $58.00 and then at Wednesday’s high of $58.36. Look for sell stops just below technical support at this week’s low of $56.21 and then at the July low of $56.04. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were weaker again in overnight trading. Corn was around 4 cents lower, soybeans down 1 to 2 cents, and wheat around 4 cents lower.
Better rainfall than expected so far this week in the U.S. Corn Belt is bearish for the grains. “Rain makes grain” is the traders’ mantra this week. Still, very hot weather in the region the next two days could hurt yield potential for the pollinating corn crop.
There are still some extended weather outlooks that say the Midwest will see hotter-and-drier-than-normal weather in late July into early August. The “weather market” in the grains very likely still has life despite this week’s downside price action.
The other negative for the U.S. agricultural markets this week is a deterioration of the U.S.-China trade negotiations. Reports today said China is holding up the trade talks because of U.S. restrictions on China’s telecommunications giant, Huwaei. President Trump on Tuesday saying his relationship with Chinese President Xi Jinping is not as close as it once was.
The big speculative “fund” traders are again loading up on the short side of the grain futures markets this week, as the charts have started to deteriorate a bit. It will be key for the corn and soybean futures markets to hold price levels above the July lows, to avoid serious near-term technical damage being inflicted.
Grain traders will closely examine the Thursday morning weekly USDA export sales data. Demand for U.S. grain has been tepid recently and will have to improve in the coming weeks, if prices can be expected to sustain any uptrends on the charts.
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