Tuesday, July 9–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker in quieter overnight trading. U.S. stock indexes are pointed toward moderately lower openings when the New York day session begins.
The U.S. economic highlight of this week will be Fed Chairman Jerome Powell speaking to the U.S. House of Representatives on U.S. monetary policy on Wednesday morning. He follows that up with testimony to a Senate panel on Thursday. Powell will surely be asked by lawmakers what he thinks about President Trump bashing him recently, including pondering firing him. Powell may also shed some light on when the next U.S. interest rate increase is coming, or not.
In a geopolitical matter that is presently on the back burner of the marketplace, Iran continues its sabre rattling against the U.S. The regime said Monday it intends to further breach its nuclear agreement with the United Nations unless the U.S. eases economic sanctions against Iran.
The key “outside markets” today see Nymex crude oil prices higher and trading around $58.00 a barrel. Meantime, the U.S. dollar index is firmer and hit a three-week high in early U.S. trading.
U.S. economic data due for release Tuesday is again light and includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the NFIB small business index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker on more mild profit taking after hitting a contract and record high last Friday. Bulls have the solid overall near-term technical advantage. There are still no early chart clues of a market top being close at hand. The 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 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 Monday’s high of 2,994.75 and then at the contract high of 3,006.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,955.50 and then at 2,930.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower on more profit taking after hitting a two-month high last Friday. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,805.75 and then at Monday’s high of 7,863.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,743.00 and then at 7,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading, on some more profit taking. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at Monday’s high of 155 22/32 and then at 156 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 25/32 and then at last week’s low of 154 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower and hit a two-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading a bit now. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below with 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 support lies at the overnight low of 127.05.5 and then at 127.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 127.16.0 and then at Monday’s high of 127.23.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is higher and hit a three-week high in early U.S. trading. Bulls have upside momentum. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above 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 the June high of 97.265 and then at 97.500. Shorter-term support is seen at the overnight low of 96.970 and then at Monday’s low of 96.765. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
August Nymex crude oil prices are higher in early U.S. trading. Bulls still have the slight overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is below the 9-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 this week’s high of $58.46 and then at $59.00. Look for sell stops just below technical support at this week’s low of $57.30 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were solidly lower in overnight trading. Corn was down around 6 to 8 cents, wheat off 6 to 7 cents and soybeans down around 4 to 5 cents.
The weekly USDA crop progress reports released Monday afternoon showed the U.S. corn condition rating rose a bit. Ninety-eight percent of the corn crop had emerged as of July 7, whereas 100% of the crop is typically emerged at this point in the growing season. USDA reported only 8% of the corn crop was in the silking stage as of Sunday compared to 22% for the five-year average. Recent drier and warmer weather pushed the corn crop rated “good” to “excellent” up 1%, to 57%, which was in line with market expectations but 18% behind last year’s crop condition.
USDA’s soybean condition ratings dropped slightly versus trader expectations for some improvement. As of last Sunday, 96% of the U.S. soybean crop had been planted–3% behind the five-year average. Ninety percent of the crop was emerged as of July 7, which compares to 98% for the five-year average. Just 10% of the U.S. soybean crop was blooming versus 32% for the five-year average and 44% seen last year at this time. USDA rated the amount of soybeans “good” to “excellent” at 53%; the market was expecting a 1% increase. The amount of the soybean crop rated “poor” to “very poor” was up 1%, to 12%.
Warmer, drier weather over the past week helped the development of a late-planted U.S. spring wheat crop, with 56% of the crop headed as of Sunday. That’s still behind 73% headed for the five-year average. Spring wheat’s condition rating by USDA saw 78% of the crop “good” to “excellent,” which is up 3% from last week.
Drier, warmer weather in the U.S. Midwest the past week is deemed bearish for the grains markets. However, there are some weather forecasters calling for the building of a high-pressure ridge over the Midwest starting next week. That means higher temperatures and less rainfall. High-pressure ridges are also called “heat domes.”
Grain traders are starting to focus on Thursday’s monthly USDA supply and demand report, which is likely to move the markets, as USDA officials said they will factor into new-crop supplies the updated U.S. corn and soybean acreage figures from the June report from the agency, as well as recent crop condition ratings.
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