Friday, July 5–Jim Wyckoff’s Morning Web Log
Note: I am out of the office this morning. My friend and fellow analyst/trader Ken Seehusen produced some of my morning report. Ken’s style is a bit different than mine, but I think you’ll also benefit from Ken’s work.—Jim
OVERNIGHT DEVELOPMENTS
The market place was on hold early Friday, awaiting the U.S. jobs report. Look for active trading in many markets, in the immediate aftermath of the employment report. However, activity is likely to quickly die down as many are still on their U.S. Independence Day holiday.
Traders and investors are also anxiously watching developments in Egypt. Crude oil prices have risen Friday on news that a state of emergency has been declared in the Suez and South Sinai provinces of Egypt. Reports said there was an Islamist attack at the Arish Airport. While reports said the Suez Canal is operating normally, any disruption of one of the world’s most important major world waterways would be very market-sensitive. Earlier this week the Egyptian military overthrew the sitting president and installed its own temporary leader.
European stocks were narrowly mixed Friday as the U.S. jobs report was awaited. Traders are still digesting the somewhat surprising news from the European Central Bank and the Bank of England Thursday, in which both gave forward guidance and said they would keep interest rates low for the foreseeable future. The market place perceived central banks’ statements to be firmly on dovish side. The Euro currency has seen selling pressure following the ECB meeting.
The STOCK INDEXES
The September NASDAQ 100 was higher overnight as it extends the rally off June’s low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If September extends the aforementioned rally, the reaction high crossing at 2969.75 is the next upside target. Closes below the 10-day moving average crossing at 2899.20 would confirm that a short-term top has been posted. First resistance is the reaction high crossing at 2999.00. Second resistance is May’s high crossing at 3044.00. First support is the 10-day moving average crossing at 2899.20. Second support is the 38% retracement level of the November-May rally crossing at 2838.86.
The September S&P 500 was higher overnight as it extends the rally off last Monday’s low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing at 1610.46 would confirm that a low has been posted while opening the door for additional gains. If September renews the decline off May’s high, the 38% retracement level of the November-May rally crossing at 1545.59 is the next downside target. First resistance is the reaction high crossing at 1648.70. Second resistance is May’s high crossing at 1678.00. First support is the 10-day moving average crossing at 1597.92. Second support is June’s low crossing at 1553.80.
INTEREST RATES
September T-bonds were lower overnight as they consolidate some of the rally off June’s low. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing at 137-04 are needed to confirm that a low has been posted and would open the door for additional short-term gains. If September renews the decline off May’s high, weekly support crossing at 130-24 is the next downside target. First resistance is the 20-day moving average crossing at 137-04. Second resistance is the reaction high crossing at 140-28. First support is June’s low crossing at 133-04. Second support is weekly support crossing at 130-24.
ENERGY MARKETS
August Nymex crude oil was higher overnight as it extends the rally off April’s low. Stochastics and the RSI are overbought but remain bullish signaling that sideways to higher prices are possible near-term. If August extends the aforementioned rally, last April’s high crossing at 104.50 is the next upside target. Closes below the 20-day moving average crossing at 97.16 would confirm that a short-term top has been posted. First resistance is the overnight high crossing at 102.19. Second resistance is last April’s high crossing at 104.50. First support is the 20-day moving average crossing at 97.16. Second support is the reaction low crossing at 92.67.
CURRENCIES
The September Dollar was higher overnight as it extends the rally off June’s low. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If September extends the rally off June’s low, May’s high crossing at 84.83 is the next upside target. Closes below the 20-day moving average crossing at 82.37 would confirm that a short-term top has been posted. First resistance is the 87% retracement level of the May-June decline crossing at 84.31. Second resistance is May’s high crossing at 84.83. First support is the 10-day moving average crossing at 83.33. Second support is the 20-day moving average crossing at 82.37.
GRAINS
The grain markets will begin trading at 8:30 EST. this morning. Here is a recap of Wednesday’s trade.
July Corn closed up 5 1/2-cents at 6.78 1/4. July corn closed higher on Wednesday as it consolidated some of Monday’s decline. The high-range close sets the stage for a steady to higher opening when Friday’s night session begins trading. Stochastics and the RSI are diverging and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below Tuesday’s low crossing at 6.51 would greatly increase the odds that a short-term top has been posted. If July extends the rally off April’s low, the 38% retracement level of the August-April decline crossing at 6.91 1/2 is the next upside target. First resistance is Monday’s high crossing at 6.90. Second resistance is the 38% retracement level of the August-April decline crossing at 6.91 1/2. First support is Tuesday’s low crossing at 6.51. Second support is the reaction low crossing at 6.40 1/2.
July wheat closed up 8 1/4-cents at 6.57 3/4. July wheat closed higher due to short covering on Wednesday as it consolidates some of the decline off June’s high. The mid-range close sets the stage for a steady opening when Friday’s night session begins trading. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If July extends the decline off June’s high, weekly support crossing at 6.25 3/4 is the next downside target. Closes above the 20-day moving average crossing at 6.79 1/2 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 6.68 1/2. Second resistance is the 20-day moving average crossing at 6.79 3/4. First support is Monday’s low crossing at 6.43 3/4. Second support is weekly support crossing at 6.25 3/4.
July soybeans closed up 10 1/2-cents at 15.83 1/2.
July soybeans closed higher on Wednesday. The mid-range close sets the stage for a steady to higher opening when Friday’s night session begins trading. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible. If July extends this week’s rally, last September’s high crossing at 16.05 3/4 is the next upside target. Closes below the 20-day moving average crossing at 15.31 1/4 would confirm that a short-term top has been posted. First resistance is Monday’s high crossing at 16.04 1/4. Second resistance is last September’s high crossing at 16.05 3/4. First support is the 20-day moving average crossing at 15.31 1/4. Second support is last Monday’s low crossing at 14.85 1/2.
