Tuesday, July 25–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Global equity markets were steady to narrowly mixed in quieter overnight dealings. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes are at or near record highs with no early chart clues to suggest they are topping out.
Gold prices are moderately lower in pre-U.S. session trading, on some normal profit taking from recent gains that saw prices hit a four-week high on Monday.
Focus of the world marketplace is on the Federal Reserve’s Open Market Committee meeting (FOMC) that begins Tuesday morning and ends early Wednesday afternoon with a statement. No changes in U.S. monetary policy are expected. However, the Fed could indicate the timing of reducing its big balance sheet of U.S. securities. The tone of the FOMC statement will also be important for markets. Just recently Federal Reserve Chair Janet Yellen has sounded a more dovish tone on U.S. monetary policy.
In overnight news, the closely watched German Ifo business sentiment index rose to a record 116.0 in July, from 115.2 in June. A July reading of 114.9 was forecast.
The important “outside markets” on Tuesday morning see Nymex crude oil futures firmer and trading close to $47.00 a barrel. OPEC oil ministers are meeting in St. Petersburg, Russia. Saudi Arabia has chastised cartel member nations for not adhering to their production quotas and has pledged to cut even more of its own oil production levels.
The U.S. dollar index is firmer today on a corrective bounce after hitting a 13-month low on Monday. The greenback has been on a downhill slide against the other major currencies since January.
U.S. economic data due for release today includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the S&P/Case-Shiller home price index, the monthly house price index, the consumer confidence index, and the Richmond Fed business survey.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly higher in early U.S. trading. Prices are very close to last week’s contract and record high. The bulls still 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 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 contract high of 2,476.25 and then at 2,490.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,463.50 and then at last week’s low of 2,448.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index September futures: Prices are slightly higher in early U.S. trading today. Prices Monday hit a 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 and 18-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 5,954.75 and then at 5,975.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 5,905.00 and then at 5,889.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are lower on more profit taking from recent gains. Bulls still 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 154 even and then at the overnight high of 154 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at 153 16/32 and then at 153 even. 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, on more profit taking from recent gains. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 126.06.5 and then at Monday’s high of 126.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.25.0 and then at 125.20.0. 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 slightly higher and did hit another 13-month low in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 94.170 and then at 94.500. Shorter-term support is seen at the overnight low of 93.635 and then at 93.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
September Nymex crude oil prices are higher in early U.S. trading. Prices have been trending higher for five weeks. It appears a near-term market bottom is in place. Look for buy stops to reside just above technical resistance at the July high of $47.74 and then at $48.00. Look for sell stops just below technical support at the overnight low of $46.38 and then at $46.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures markets were mixed overnight, with corn and wheat weaker and soybeans higher. Some rainfall and cooler temps are forecast for the U.S. Corn Belt this week. This week’s price action in the grains will be extra important, as this week will likely determine if the weather market has run its course, or if it still has legs to run.