Tuesday, September 10–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were narrowly mixed overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.
In overnight news, China’s consumer price index rose 2.8% in August, year-on-year, which was the same rate as July. The rise was more than expected and was led by surging pork prices. China’s producer prices were down 0.8% in August, year-on-year, due in part to the negative effects of China’s trade war with the U.S. China’s central bank eased its monetary policy last week and is likely to do it again in the near term.
Focus is turning to the monetary policy meeting of the European Central Bank on Thursday, at which time the ECB is expected to cut interest rates, pushing them further into negative territory. The FOMC meets next week.
The key “outside markets” today see Nymex crude oil prices slightly firmer and trading around $58.00 a barrel. Thursday sees a meeting of the OPEC oil cartel. Oil prices have rallied recently on ideas OPEC nations will continue to constrict their spigots. The U.S. dollar index is firmer in early U.S. trading today.
U.S. economic data due for release Tuesday is light and includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the NFIB small business index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls still have the firm 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 early today. Today, shorter-term technical resistance comes in at this week’s high of 2,993.00 and then at 3,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,967.25 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are weaker in early U.S. trading. Bulls still have the firm overall 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 7,877.00 and then at last week’s high of 7,912.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,801.50 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a two-week low in early U.S. trading. Bulls still have the firm overall near-term technical advantage but are fading a bit now and need to show fresh power soon. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 163 16/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 6/32 and then at 162 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are lower and hit a two-week low in early U.S. trading. Bulls still have the firm overall near-term technical advantage but are now fading a bit. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at the overnight low of 130.18.0 and then at 130.10.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.26.5 and then at 131.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is modestly up in early U.S. trading. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 98.040 and then at 98.490. Shorter-term support is seen at last week’s low of 97.580 and then at 97.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are higher and hit a five-week high in early U.S. trading. Bull have the overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $58.39 and then at $59.00. Look for sell stops just below technical support at the overnight low of $57.84 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were higher in overnight trading, on short covering from recent selling pressure. Corn was up around 5 to 6 cents, soybeans up around 7 cents and wheat up 4 to 6 cents.
Grain futures market bulls are also encouraged by positive U.S.-China trade comments coming from U.S. Treasury Secretary Mnuchin late Monday. He said President Trump does not expect a U.S. economic recession due in part to an expected trade agreement with China. Mnuchin said a lot of progress has been made in the trade negotiations and that China trade officials are coming to Washington for talks in October.
The weekly USDA weekly crop progress reports, released Monday afternoon, showed a lower-than-expected corn condition rating at 55% good to excellent compared to
58% last week and a 72% five-year average. Those numbers also supported buying interest in corn. The soybean crop condition rating remained unchanged at 55% good to excellent, which was expected.
The data point of the week for the US grain markets is Thursday’s monthly USDA supply and demand report, including new government estimates of the size of the US crops.
Weather in the US Midwest remains non-threatening, including no strong signs of an early hard frost that would kill the still-maturing corn and soybean crops.
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