Daily Morning Report

The U.S. stock indexes saw a strong rebound from the contract lows scored in late March. However, at mid-week this week the bulls were fading. See on the daily bar chart for the June e-mini S&P futures that the bears are keeping a downtrend line in place. The next upside price objective for the bulls is to push prices above solid chart resistance at this week’s high. A drop in prices below chart support at this week’s low would be a bearish development to suggest a retest of the contract low, or below. Stay tuned! Jim

Wednesday, April 1–Jim Wyckoff’s Morning Markets Report

On this first day of April and of the second quarter, global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The first quarter saw the U.S. stock market see its biggest losses in 12 years.

Traders and investors are gloomier Tuesday following President Trump’s daily Covid-19 update late Tuesday afternoon, in which he delivered a more somber assessment of the situation. Trump said from 140,000 to 240,000 Americans will die from the illness, and that’s if citizens continue their distancing and home isolation. He said it’s going to be a “very rough” next couple weeks as the coronavirus is likely to peak in mid- to late-April. A best-case scenario appears to be the U.S. economy starting back up in May.

In overnight news, China got some more positive economic data Wednesday, as the Caixin manufacturing purchasing managers index (PMI) in March rose to 50.1 compared to 40.3 in February. A reading above 50.0 suggests growth in the sector. This news is a positive for those economies hit so hard by the coronavirus, as China’s economy has been able to stage a very swift recovery. However, more and more market watchers and media outlets are questioning the reliability of statistics coming out of China, especially those suggesting how fast its economy recovered from the coronavirus outbreak.

The Euro zone manufacturing PMI for March came in at 44.5, which was in line with market expectations and compares with February’s reading of 49.2.

The important outside markets today see Nymex crude oil prices lower and trading around $20.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are respected energy analysts saying there is still significantly more near-term downside potential in Nymex crude oil, amid a supply glut and a demand shock. The U.S. dollar index is solidly higher early this morning as the bulls are having a strong week. The 10-year U.S. Treasury note yield is trading around 0.61% Tuesday morning—down from Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. manufacturing PMI, the global manufacturing PMI, domestic auto industry sales, the ISM manufacturing report on business, construction spending and the weekly DOE liquid energy stocks report.

–Jim
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Tuesday, March 31–Jim Wyckoff’s Morning Markets Report

On this technically important last trading day of the month and of the quarter, global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Traders and investors are a bit more upbeat early this week following news Monday morning that a vaccine for Covid-19 is on a fast track and could be ready for the public by early 2021. Still, most global stock indexes will experience their worst quarter since 2008.

In overnight news, China got some positive economic data Tuesday, as the manufacturing purchasing managers index (PMI) for March was 52.0 from 35.7 in February, while the services PMI was 52.3 in March versus 29.6 in February. A reading above 50.0 suggests growth in the sector. This news was uplifting to those economies hit hard by the coronavirus, as China’s economy has been able to stage a very swift recovery.

The important outside markets today see Nymex crude oil prices higher and trading around $21.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are anecdotal reports that U.S. crude oil trading on some local cash markets is selling for as little as $5.00 a barrel due to a supply glut and no place to store oil in the U.S. The U.S. dollar index is rebounding early this week after last week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.68% Tuesday morning—up a bit from Monday. Gold prices are sharply lower so far this week, amid the uptick in trader/investor risk appetite and the stronger U.S. dollar.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P Case-Shiller home price index, the consumer confidence index, and the ISM-Chicago business survey.

–Jim
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The Nymex crude oil futures market on Monday plumbed an 18-year low of $19.92 a barrel, amid the global coronavirus outbreak that has severely reduced demand for energy. Throw in an oil-price war between major producers Saudi Arabia and Russia and you get oil prices in the teens. Oil prices are not likely at all to stay in the teens for an extended period of time. History shows that steep oil price downdrafts see fairly fast rebounds, as in weeks and not months. Stay tuned! Jim

Monday, March 30–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Traders and investors are entering another week uncertainty, as the mood of the marketplace has turned from panic to gloom. U.S. President Trump on Sunday extended the shutdown of most U.S. retail businesses and schools by another 30 days, to April 30. The U.S. can expect a best-case scenario of around 100,000 to 200,000 deaths and millions infected with the illness, said the top U.S. health official over the weekend.

As the first quarter comes to an end Tuesday, market watchers are wondering how many companies and individuals hurt by the coronavirus outbreak can pay their bills, including a domino effect occurring on the matter as the global economy seizes up. Also in question are the major credit ratings agencies and how they will deal with the many big companies that are in a serious financial bind. It’s tough to be a buyer of any markets at all in these conditions, and with the ultimate ramifications of the Covid-19 outbreak still so uncertain.

The important outside markets today see Nymex crude oil prices weaker and hitting an 18-year low of $19.92 a barrel overnight. The U.S. energy industry has shuddered the past three weeks, which has led to much of the selling pressure in the stock market. The U.S. dollar index is higher on a corrective bounce after last week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.64% Monday morning–well down from last week’s levels.

U.S. economic data due for release Monday includes pending home sales and the Texas manufacturing outlook survey.

–Jim
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Global stock markets were mixed to firmer in overnight trading, following the big U.S. stock market gains Thursday. U.S. stock index futures are presently pointed toward lower openings when the New York electronic day session begins, on a corrective pullback following this week’s very strong gains. The S&P 500 stock index is up almost 20% from its low seen Monday. The global equity markets have been boosted in part as the U.S. Congress is on the verge of passing a $2.2 trillion financial aid package for U.S. businesses and citizens. However, any trader/investor watching the evening national news cannot come away with a good feeling, as the U.S. has passed all other countries in Covid-19 cases and New York’s health care system is in crisis and straining to keep up with coronavirus cases. Other states are also seeing an alarming rise in new Covid-19 cases.

Heading into another uncertain weekend, its likely traders and investors are not going to be in hearty buying moods. Still, if the U.S. stock indexes can avoid major losses Friday, then this week’s strong gains in the U.S. indexes do begin to suggest they have put in market bottoms.

The important outside markets today see Nymex crude oil prices near steady and trading around $22.50 a barrel. The U.S. dollar index is firmer on a mild corrective bounce after this week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.075% Friday morning, down from Thursday’s level.

U.S. economic data due for release Friday includes personal income and outlays and the University of Michigan consumer sentiment survey.

–Jim
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