Chinese stocks were sharply lower last night. They were down 4.3% last night, and are down nearly 20% in the last month. Last night’s Chinese selloff was attributed to a report that showed a sharp drop in loans in July. This is leading some to suspect that China is tightening credit policy. In Bloomberg’s overnight stock story, they commented that Chinese equities have been a leading indicator for world stock markets the past two years. The rest of the world’s equity markets are following China down, which in turn is pushing up Treasuries (and the Dollar a bit), and hitting commodities. A bullish API report for crude oil was offset by a report that Chinese oil sales fell in July. The DOE oil inventory report is out at 9:30; it’s expected that crude inventories rose 1.3 mln. barrels last week. There are no economic releases due today. A number of markets saw narrow ranges yesterday (presaging today’s moves?) so there are lots of breakout setups today.
Stock Indices: All have breakout setups; watch Monday’s lows for a downside breakout point.
Sept. Treasury Bonds: Breakout setup; it’s currently trying to clear trendline resistance at 12019 (drawn off the last two swing highs).
Sept. Euro Currency: Breakout setup; watch the overnight high at 14173 and 14080 for breakout points.
Sept. Canadian Dollar: Breakout setup, watch Monday’s low at 8987 for a downside breakout point.
Dec. Gold: Breakout setup; watch the overnight low at 933.30 for a downside breakout point.
Sept. Silver: Breakout setup, but the train has already left the station. 1382 was Monday’s low, and 1381 was Fibonacci retracement support. The first downside target was 1350.
Dec. Cocoa: Breakout setup; use yesterday’s high and low as breakout points.
Oct. Sugar: Three doji days leave it primed for a directional move. Watch 2139 on the downside and 2234 on the upside.
Oct. Crude Oil: Late day strength yesterday couldn’t hold; watch crude at 9:30 when the inventory report is released. 69.85 is midpoint of this week’s range; breaking it could extend a selloff.
Oct. Lean Hogs: Big bar with a doji yesterday; watch for a directional move. Watch last week’s low at 43.40 as a point to sell.
Nov. Soybeans: Breakout day; use the overnight low at 940-4 as a downside breakout point.
Dec. Corn: I like the short side as long as it stays under 218 to 220. Watch 212 as a downside breakout point.
This is the morning update to my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.
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