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07/21/2017

  • 07/21/2017

    Friday, July 21

    OVERNIGHT DEVELOPMENTS

    Global equity markets were steady to narrowly mixedovernight, in quieter dealings amid a lack of fresh, majorfundamental news to drive the markets. A lazy, hazysummertime trading atmosphere has enveloped U.S. andEuropean stock markets. U.S. stock indexes are pointedtoward slightly lower openings when the New York day sessionbegins.

    Gold prices are firmer and hit a three-week high overnight.Prices are in a two-week-old uptrend and bulls havemomentum.

    It appears the “take away” from this week’s news events andmarkets’ price action is growing notions the major centralbanks of the world are not in a big hurry at all to tightentheir monetary policies, with a major reason being very tameprice inflation expectations. European Central BankPresident Mario Draghi on Thursday sounded a surprisinglydovish tone on ECB money policy. The Bank of Japan onThursday lowered its inflation expectations. And the weekbefore, Fed Chair Janet Yellen spoke before the U.S.Congress and suggested the Fed will only very graduallyraise U.S. interest rates.

    The aftermath of less hawkish rhetoric coming from worldcentral bankers has seen U.S. stock indexes hit recordhighs, world government bond yields have dropped, the Eurocurrency has rallied to a 14-month high, and the U.S. dollarindex has hit a 13-month low. Gold has also seen a decentrally the past couple weeks.

    In overnight news, a poll of Euro zone forecasters predicteda 1.5% annual inflation rate for the Euro zone, which iswell below the 2.0% annual inflation target the ECB wants.

    The important “outside markets” on Friday morning see Nymexcrude oil futures slightly higher and trading above $47.00 abarrel. Recent upside price action suggests a market bottomis in place for oil. However, my bias is that crude oilprices will remain trapped in a choppy and sideways tradingrange between $40 and $50 a barrel in the coming months.Meantime, the U.S. dollar index is lower and hit a 13-monthlow overnight. The greenback bears remain in firm near-termtechnical command as prices have been trending lower sincethe beginning of this year.

    U.S. STOCK INDEXES

    S&P 500 September e-mini futures: Prices are slightly lowerin early U.S. trading. Prices Thursday hit a contract andrecord high. The bulls have the solid overall near-termtechnical advantage. The shorter-term moving averages (4-,9- and 18-day) are bullish early today. The 4-day movingaverage is above the 9-day and 18-day. The 9-day is abovethe 18-day moving average. Short-term oscillators (RSI, slowstochastics) are neutral to bearish early today. Today,shorter-term technical resistance comes in at the contracthigh of 2,476.25 and then at 2,490.00. Buy stops likelyreside just above those levels. Downside support for activetraders today is located at 2,457.75 and then at this week’slow of 2,448.00. Sell stops are likely located just belowthose levels.

    Nasdaq index September futures: Prices are weaker in earlyU.S. trading today. Prices Thursday hit a record high. Bullshave the solid overall near-term technical advantage.Shorter-term moving averages (4- 9-and 18-day) are bullishearly today. The 4-day moving average is above the 9-day and18-day. The 9-day average is above the 18-day. Short-termoscillators (RSI, slow stochastics) are neutral to bearishearly today. Shorter-term technical resistance is seen atthe contract high of 5,938.50 and then at 5,950.00. Buystops likely reside just above those levels. On thedownside, short-term support is seen at 5,900.00 and then at5,889.00. Sell stops are likely located just below thoselevels.

    U.S. TREASURY BONDS AND NOTES

    September U.S. T-Bonds: Prices are higher and hit a three-

    week high in early U.S. trading. Bulls are having a verygood week. Shorter-term moving averages (4- 9- 18-day) areneutral early today. The 4-day moving average is above the9-day and 18-day. The 9-day is below the 18-day movingaverage. Oscillators (RSI, slow stochastics) are bullishearly today. Shorter-term technical resistance is seen at155 even and then at 155 16/32. Buy stops likely reside justabove those levels. Shorter-term support lies at 154 evenand then at 153 20/32. Sell stops likely reside just belowthose levels.September U.S. T-Notes: Prices are higher and hit a three-

    week high in early U.S. trading. Shorter-term movingaverages (4- 9- 18-day) are bullish early today. The 4-daymoving average is above the 9-day and 18-day. The 9-day isabove the 18-day moving average. Oscillators (RSI, slowstochastics) are bullish early today. Shorter-termresistance lies at 126.12.0 and then at 126.16.0. Buy stopslikely reside just above those levels. Shorter-termtechnical support lies at 126.00.0 and then at 125.21.5.Sell stops likely reside just below those levels.

    U.S. DOLLAR INDEX

    The September U.S. dollar index is lower and hit a 13-monthlow in early U.S. trading. Bears have the solid overallnear-term technical advantage. The shorter-term movingaverages for the dollar index are bearish early today as the4-day is below the 9-day. The 9-day is below the 18-daymoving average. Short-term oscillators for the dollar indexare bearish early today. The dollar index finds shorter-termtechnical resistance at the overnight high of 94.170 andthen at 94.500. Shorter-term support is seen at theovernight low of 93.830 and then at 93.500.

    NYMEX CRUDE OIL

    September Nymex crude oil prices are lower in early U.S.trading, on profit taking from recent good gains. It stillappears a near-term market bottom is in place. Look for buystops to reside just above technical resistance at thisweek’s high of $47.74 and then at $48.00. Look for sellstops just below technical support at $46.00 and then at$45.50.

    GRAINS

    Grain futures markets were steady to lower overnight—cornand soybeans lower and wheat steady. A serious weathermarket is at work in the grains. Some spotty rains overnighthave the corn and soybean markets weaker. However, theextended weather forecasts still do not look promising forany significant rains in the Corn Belt. That will continueto limit selling interest in the grains.

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