Daily Morning Report

Friday, April 24–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The U.S. Congress has just passed another nearly $500 billion aid package for U.S. businesses damaged by the Covid-19 pandemic. This week the total number of unemployed Americans surpassed 25 million, based on weekly jobless claims reports.

In overnight news, Germany’s closely watched Ifo business sentiment index fell to a record low of 74.3 in April from 85.9 in March. German companies “have never been so pessimistic about the coming months,” said an Ifo official.

China’s central bank on Friday cut the rate charged on its targeted medium-term lending facility by 20 basis points, to 2.95%. The move was expected.

The other important outside markets today see Nymex crude oil futures a bit weaker and trading around $16.00 a barrel, following a strong two-day rally that appears to have stabilized the market. The U.S. dollar is index firmer and greenback bulls remain strong. The 10-year U.S. Treasury note yield is trading around 0.6% this morning.

U.S. economic reports due for release Friday include the durable goods orders report and the University of Michigan consumer sentiment survey.

–Jim
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The U.S. stock indexes have been trending higher for the past four weeks, which suggests two things: they have put in market bottoms and that prices can continue to push sideways to higher in the near term. A drop below the support line seen on the chart would put the price uptrend in jeopardy. A push in prices above the resistance line would give the bulls fresh power and solidify the uptrend.–Stay tuned! Jim

Thursday, April 23–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. stock indexes are seeing a corrective bounce at mid-week, following solid losses scored on Monday and Tuesday. The U.S. equity traders are watching corporate earnings reports that have started to come out this week, but have so far been mostly overshadowed by the collapse in the global crude oil market.

Global stock markets were narrowly mixed in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The stock markets are working to recover from early-week pressure tied to the historic collapse in crude oil prices. Oil prices are solidly higher again today, with Nymex West Texas Intermediate (WTI) June futures trading up around $2.00 at $15.50. U.S.-Iran tensions up-ticked Wednesday when President Trump tweeted that he has instructed the U.S. navy to “destroy” any Iranian vessels that harass U.S. ships.

North American and European citizens are still mostly locked down as the debate intensifies on the question of when to reopen local, regional and national economies. Opinions on the matter very widely, with there being no absolutely correct answer.

In more signs the Covid-19 pandemic is wreaking severe pain on the global economy, the Euro zone April composite purchasing managers index (PMI) came in at 13.5 versus 29.7 in March. The April reading was well below market expectations. A reading below 50.0 suggests contraction.

The other important outside markets today see the U.S. dollar index firmer. Greenback bulls remains strong. The 10-year U.S. Treasury note yield is trading around 0.625% this morning—up from levels seen earlier this week and a sign of a bit less anxiety in the marketplace.

U.S. economic reports due for release Thursday include the weekly jobless claims report, expected to show new claims north of 4 million. Other reports include the U.S. flash services PMI and flash manufacturing PMI, new residential sales and the Kansas City Federal Reserve manufacturing survey.

–Jim
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Wednesday, April 22–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. stock indexes are seeing a corrective bounce at mid-week, following solid losses scored on Monday and Tuesday. The U.S. equity traders are watching corporate earnings reports that have started to come out this week, but have so far been mostly overshadowed by the collapse in the global crude oil market.

This week’s stunning and historic trading action in crude oil futures, in which the just- expired May Nymex contract fell deep into negative price territory but recovered to around $10 a barrel by its expiry, and which has seen Brent crude oil futures fall below $20 a barrel and hit a 21-year low, has possibly caused some oil-based exchange traded funds (ETFs) to be at or near a state of total failure. Speculation in the marketplace at present is that Asian investors have been hit the hardest—so hard that some Asian financial markets could experience a contagion effect and implode, themselves. So far this is just speculation. However, such talk could be partly why safe-haven gold prices are up around $35 an ounce Wednesday. What was so ironic for this veteran reporter on Monday and Tuesday was the eerie calm in the foreign exchange markets, amid the storm of an unprecedented meltdown in the global oil market—arguably the most fungible commodity market in the world. The Russian ruble has been dinged, but the FOREX “majors” appear to have paid little attention to the matter. However, if Asian financial markets become keenly distressed the FOREX majors will wake up in a hurry. Of note, Hong Kong’s de-facto central bank, the Hong Kong Monetary Authority, on Wednesday implemented a temporary U.S. dollar-liquidity facility for the city-state’s banks. The move allows holders of U.S. Treasuries to borrow greenbacks against their Treasury holdings. The action could be tied to crude oil’s severe price declines this week and could be a precursor for some rough waters just ahead in the Asian financial markets.

Oil prices are more stable today, with Nymex West Texas Intermediate (WTI) June futures trading around $11.50 and Brent futures just below $20.00. The other important outside markets today see the U.S. dollar index weaker on a corrective pullback from recent gains. The 10-year U.S. Treasury note yield is trading around 0.58% this morning.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the monthly house price index and the weekly DOE liquid energy stocks report.

–Jim
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The world marketplace is still buzzing and even shaken after Monday’s astonishing and historic trading action in Nymex crude oil futures, in which the expiring May contract fell deep into negative territory by the close—meaning the up-to-then-profitable shorts were forced to take delivery of physical crude oil with no place to store it, and then they had to pay up to get rid of the oil—thus the May futures price trading at -$40 at one point. (More on this important matter in my bi-weekly newsletter that will be out Tuesday.) That price action in crude has buyers in many commodity markets even more leery early this week, which is also spilling over into selling pressure in global stock markets.–Stay tuned! Jim

Tuesday, April 21–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The world marketplace is still buzzing and even shaken after Monday’s astonishing and historic trading action in Nymex crude oil futures, in which the expiring May contract fell deep into negative territory by the close—meaning the longs could be forced to take delivery of physical crude oil with no place to store it, and then they had to pay up to get rid of the oil—thus the May futures price trading at -$40 at one point. (More on this important matter in my bi-weekly newsletter that will be out Tuesday.) That price action in crude has buyers in many commodity markets even more leery early this week, which is also spilling over into selling pressure in global stock markets.

This is a busy week for U.S. corporate earnings, which are very likely to remind traders and investors of debilitating effects of the Covid-19 pandemic, even as some parts of the North American economy may be set to reopen soon.

The important outside markets today see June Nymex crude oil futures down around $4.00, or 35%, at $16.40. Brent crude oil futures are trading just above $18.00 and have dropped over 25% this week. The U.S. dollar index higher on safe-haven demand. The 10-year U.S. Treasury note yield is trading around 0.575% this morning—well down from levels seen recently and a sign of “flight to quality” amid higher anxiety in the marketplace at present.

U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and existing home sales.

–Jim
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