Thursday, April 25–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed to weaker overnight. Asian markets were somewhat pressured by some downbeat GDP data coming out of South Korea. At down 0.3% in the first quarter, South Korea’s GDP was the weakest in over 10 years. The dour report prompted the central banks in China and Japan to signal they had no intention of tightening their monetary policies anytime soon.
U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The U.S. stock indexes are trending solidly higher and this week hit record or near record and/or multi-month highs.
In other overnight news, Sweden’s Riksbank kept its monetary policy unchanged but said it likely won’t start raising interest rates until farther down the road. Riksbank’s current interest rate is -0.25%. The bank had previously said it hoped to start raising interest rates in the second half of 2019. The Swedish krona dropped sharply against the dollar on the news. This news is another signal that world interest rates remain historically low, including German bond yields this week dropping back below zero percent. This argues that worldwide inflationary pressures should remain well under control.
The U.S. dollar index is firmer and hit another multi-month high overnight. A feature in an otherwise fairly quiet marketplace this week is the surging greenback. Raw commodity markets have taken note of the strong dollar and many are feeling selling pressure as a result. Many raw commodities are priced in U.S. dollars on the world markets. So when the dollar appreciates against the other currencies, it makes those commodities more expensive to purchase in non-U.S. currency.
Another marketplace highlight recently finds Nymex crude prices trending higher, and are firmer today, near Tuesday’s six-month high of $66.60 a barrel. Brent crude oil prices climbed above $75 this week. Oil experts now reckon worldwide oil demand is outstripping supplies by around 500,000 barrels a day. At this point the rally in oil prices has not had much impact on world stock and financial markets, and could even be termed on the friendly side for equities. However, if oil prices continue to trend higher in the coming weeks, consumers and the marketplace will start to squirm a bit due to the bite of higher energy costs cutting into their overall spending on other goods. Read that bearish for stocks (reduced consumer spending) and bonds (concerns regarding rising inflation).
U.S. economic data due for release Thursday includes the weekly jobless claims report, durable goods orders and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly down in early U.S. trading today, after hitting a six-month high on Tuesday. Bulls have the solid near-term technical advantage amid a price uptrend on the daily chart and no early clues that a market top is 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 neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 2,939.75 and then at the September high of 2,961.25. Buy stops likely reside just above those levels. Downside support for active traders today is located Tuesday’s low of 2,908.00 and then at last week’s low of 2,889.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
June Nasdaq index futures: Prices are firmer in early U.S. trading and hit another contract high overnight. Bulls have the solid overall near-term technical advantage amid a price uptrend on the daily bar chart. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 7,876.25 and then at 7,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 7,802.25 and then at 7,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly lower in early U.S. trading. A downtrend is still in place on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 147 15/32 and then at 148 even. Buy stops likely reside just above those levels. Shorter-term support lies at 147 even and then at Wednesday’s low of 146 14/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are near steady in early U.S. trading. A price downtrend is still in place on the daily bar chart but now just barely. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at this week’s high of 123.18.5 and then at 123.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 123.10.0 and then at Wednesday’s low of 123.03.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The June U.S. dollar index is up early today and hit another multi-month high overnight. Bulls have the solid overall near-term technical advantage. 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 98.000 and then at 98.250. Shorter-term support is seen at the overnight low of 97.715 and then at 97.500. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
June Nymex crude oil prices are firmer in early U.S. trading. Bulls have the solid near-term technical advantage and are keeping a gentle uptrend in place on the daily bar chart. 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 neutral early today. Look for buy stops to reside just above technical resistance at this week’s high of $66.60 and then at $67.00. Look for sell stops just below technical support at the overnight low of $65.54 and then at $65.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were narrowly mixed overnight and are near their lows for this year. Traders will closely examine this morning’s weekly USDA export sales report. Grain market bears have the solid overall near-term technical advantage. There are no early clues that market bottoms are close at hand. Focus is on U.S. Corn Belt weather, which now favors the bears as field work is taking place in the region.
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 Wyc