Thursday, May 27–Jim Wyckoff’s Morning Markets Report
Global stock markets were narrowly mixed or flat overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. It will be a busy day for U.S. economic data Thursday. The inflation discussion in the marketplace has ebbed a bit this week, as Federal Reserve officials in their comments to the public recently have apparently done a good job of assuaging trader and investors worries about rising prices.
In overnight news, Bloomberg said Thursday in a morning email dispatch that “the period of engagement with China is over for the U.S., replaced by one of competition, according to Kurt Campbell, the U.S. coordinator for Indo-Pacific affairs on the National Security Council.” His comments came amid what were described as candid talks between U.S. Trade Representative Katherine Tai and China’s Vice Premier Liu. President Biden’s call for a deeper investigation into the source of the Covid-19 pandemic highlights the deteriorating U.S.-China relationship. Some have speculated the virus came from a laboratory in Wuhan, China.
Reports say China’s banking regulator, CBIRC, has asked banks to report on their cleaning up of retail investment in commodity linked products. The CBIRC wants to prevent losses but their other agenda is to reduce the speculation which has driven iron ore and other metals prices higher. They also say they want to avoid any big losses by high-profile customers which have bought futures. “When Chinese regulators ask, what they mean is you stop or you might win a holiday to a government-sponsored correctional facility for unpatriotic communists,” said broker SP Angel.
The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are lower and trading around $65.65 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.582%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the second estimate of first-quarter GDP, durable goods orders, pending home sales, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading and not far from the recent record high. Bulls have the solid 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 4,202.25 and then at the contract high of 4,228.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,133.50 and then at 4,100.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are weaker in early U.S. trading. 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 above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 13,726.25 and then at 13,804.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,610.50 and then at 13,500.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are weaker in early U.S. trading today. Bears have the overall near-term technical advantage. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 157 even and then at this week’s high of 157 12/32. Buy stops likely reside just above those levels. Shorter-term support lies at Wednesday’s low of 156 8/32 and then at this week’s low of 155 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 132.05.5 and then at 132.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.23.0 and then at this week’s low of 131.18.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The September Euro currency futures are firmer in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the February high of 1.2294 and then at 1.2325. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.2198 and then at 1.2150. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage as prices are not far below this year’s highs. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below 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 $66.00 and then at the May high of $67.02. Look for sell stops just below technical support at $65.00 and then at $64.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are mixed but mostly firmer in early U.S. pre-market trading. “Rain makes grain” is the old trader saying, and rains in the U.S. Corn Belt this week have hurt the grain market bulls. Significant to serious chart damage has been inflicted in the grain futures recently, to strongly suggest that near-term and even major market tops are in place. It’s going to very likely take a serious weather market scare in the Corn Belt this summer to revive the grain market bulls. Importantly “turns” in grain markets tend to occur right around the end of June or in early July.
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