Wednesday, August 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower overnight, on renewed worries about the U.S. imposing new tariffs on Chinese imports. Reports said some of President Trump’s advisors are advising him to sharply ramp up tariffs on China. And once again, China said it would retaliate if the U.S. set new tariffs on Chinese goods. U.S. stock indexes are pointed toward mixed openings when the New York day session begins.
In focus today is the FOMC meeting of the Federal Reserve that began Tuesday morning ends Wednesday afternoon with a statement. No changes in Fed policy are expected at this meeting, but as usual traders will parse the Fed statement on clues for futures monetary policy moves and timing.
The Bank of England meets Thursday for its regular monetary policy gathering. No changes in policy are expected from the BOE.
In overnight news, the Euro zone July manufacturing purchasing managers index (PMI) came in at 55.1, which was right in line with market expectations and compares to the 54.9 reading in June. A number above 50.0 suggests growth in the sector.
The key “outside markets” today find Nymex crude oil prices lower and trading just above $68.00 a barrel. The U.S. dollar index is slightly higher early today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. manufacturing PMI, the global manufacturing PMI, construction spending, the ISM manufacturing report on business, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady in early U.S. trading. The bulls have the firm 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 below 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 Tuesday’s high of 2,827.75 and then at last week’s high of 2,849.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,798.25 and then at last week’s low of 2,792.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index December futures: Prices are slightly higher in early trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at this week’s high of 7,309.75 and then at 7,350.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,200.00 and then at this week’s low of 7,166.75. 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 in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 143 even and then at this week’s high of 143 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 142 12/32 and then at 142 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are weaker in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at this week’s high of 119.21.0 and then at 119.25.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 119.08.0 and then at 119.00.0. 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 in early U.S. trading. Bulls still have the firm overall near-term technical advantage but trading has turned choppy and sideways. 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 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 94.700 and then at 95.000. Shorter-term support is seen at last week’s low of 93.870 and then at 93.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
September Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is even with 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 $69.00 and then at $70.00. Look for sell stops just below technical support at $67.50 and then at $67.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were lower overnight, on corrective pullbacks following recent good gains that produced bullish monthly high closes in corn, soybeans and wheat on Tuesday. Weather in the Corn Belt is still mostly benign, but warmer temps are expected in early August. Still, no serious weather markets have occurred this summer.
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