Daily Morning Report

Friday, May 26–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock markets were lower Friday, on the back of sharp losses in the crude oil futures market seen on Thursday. Overseas markets fell despite U.S. stock indexes posting record highs Thursday. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.

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OVERNIGHT DEVELOPMENTS

World stock markets were mixed overnight. U.S. stock indexes
are pointed toward narrowly mixed openings when the New York
day session begins.

Gold prices are trading modestly higher in pre-U.S. session
trading.

The feature in the marketplace early this week is a
continuation of the recent rally in the crude oil market.
Nymex crude oil futures prices are challenging $50 a barrel
Monday morning. Reports said Saudi Arabia and Russia have
agreed to extend the current OPEC-Russia oil-production-
reduction accord by nine months. Nymex crude oil prices have
rallied around $6.00 a barrel from the May low.

The world marketplace has not reacted much to weekend news
that North Korea launched another ballistic missile and that
a major cyber-attack that started late Friday has hit
computers around the world.

The other key outside market on Monday morning sees the U.S.
dollar index trading lower. The greenback bears have the
overall near-term technical advantage.

U.S. economic data due for release Monday includes the
Empire State manufacturing survey, the NAHB housing market
index and Treasury international capital data.

–Jim

U.S. STOCK INDEXES

S&P 500 June e-mini futures: Prices are slightly higher in
early U.S. trading. The bulls have the solid overall near-
term technical advantage as prices hover near last week’s
contract and record high. There are no early clues that a
market top is close at hand. The shorter-term moving
averages (4-, 9- and 18-day) are neutral early today. The 4-
day moving average is even with the 9-day. The 9-day is
above the 18-day moving average. Short-term oscillators
(RSI, slow stochastics) are neutral to bearish early today.
Today, shorter-term technical resistance comes in at the
contract high of 2,403.75 and then at 2,415.00. Buy stops
likely reside just above those levels. Downside support for
active traders today is located at 2,375.00 and then at
2,360.00. Sell stops are likely located just below those
levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index June futures: Prices are slightly weaker in
early U.S. trading after hitting a contract and record high
overnight. Bulls have the solid overall near-term technical
advantage. 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
the overnight contract high of 5,700.25 and then at
5,725.00. Buy stops likely reside just above those levels.
On the downside, short-term support is seen at 5,675.00 and
then at Friday’s low of 5,656.50. Sell stops are likely
located just below those levels. Wyckoff’s Intra-Day Market
Rating: 5.0.

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are near steady in early U.S.
trading. Prices are in a four-week-old downtrend on the
daily bar chart. Shorter-term moving averages (4- 9- 18-day)
are bearish early today. The 4-day moving average is below
the 9-day and 18-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
the overnight high of 151 23/32 and then at 152 even. Buy
stops likely reside just above those levels. Shorter-term
support lies at 151 even and then at Friday’s low of 150
23/32. Sell stops likely reside just below those levels.
Wyckoff’s Intra-Day Market Rating: 5.0

June U.S. T-Notes: Prices are slightly higher in early U.S.
trading. 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 the overnight
high of 125.20.5 and then at 125.24.0. Buy stops likely
reside just above those levels. Shorter-term technical
support lies at the overnight low of 125.13.5 and then at
125.08.0. Sell stops likely reside just below those levels.
Wyckoff’s Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The June U.S. dollar index is lower in early U.S. trading.
Bears have the overall near-term technical advantage. The
shorter-term moving averages for the dollar index are
neutral early today as the 4-day is above the 9-day and 18-
day. The 9-day is even with the 18-day moving average.
Short-term oscillators for the dollar index are bearish
early today. The dollar index finds shorter-term technical
resistance at the overnight high of 99.140 and then at
99.340. Shorter-term support is seen at 98.500 and then at
the May low of 98.355. Wyckoff’s Intra Day Market Rating:
4.0

NYMEX CRUDE OIL

June Nymex crude oil prices are solidly higher and hit a
three-week high in early U.S. trading. Bulls have upside
momentum to suggest a market bottom is in place. Look for
buy stops to reside just above technical resistance at
$50.00 and then at $51.00. Look for sell stops just below
technical support at $48.50 and then at $48.00. Wyckoff’s
Intra-Day Market Rating: 6.0

GRAINS

Grain futures markets were mixed overnight. Trading has been
choppy recently. Weather in the Corn Belt is non-threatening
at present, which is bearish. But weather in the Corn Belt
can “change on a dime” in the spring and summertime. Grain
market bears still have the overall near-term technical
advantage.

 

The e-mini S&P stock index futures bulls are still in firm near-term technical command as prices earlier this week hit a contract and record high. There are no strong, early technical clues to suggest this market has topped out. However, see at the bottom of the chart that the Moving Average Convergence Divergence (MACD) index is poised to produce a bearish line crossover signal, whereby the blue MACD line crosses below the red trigger line. The S&P bulls may be getting tired. (“Sell in May and go away.”) Price action the next few days could be extra important for the U.S. stock indexes, from a technical perspective. Stay tuned!–Jim

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed but mostly firmer overnight.
U.S. stock indexes are pointed toward slightly lower
openings when the New York day session begins.

The geopolitical front was quiet again this week. There were
also no major, markets-moving data points this week. Look
for fundamental inputs for markets to be on the upswing
soon.

Gold prices are posting moderate gains in pre-U.S. trading.
The gold market bulls have managed to stabilize prices late
this week, but still have work to do to negate the near-term
price downtrend.

In overnight news, Euro zone industrial output in March was
reported down 0.1% from February and up 1.9% year-on-year.
Hong Kong’s first-quarter GDP was reported up 4.3%, year-on-
year, which beat market expectations.

The key outside markets on Friday morning see the U.S.
dollar index near steady. The greenback bulls have had a
pretty good week, but the bears still have the slight
overall near-term technical advantage. Meantime, Nymex crude
oil prices are also near steady in pre-U.S. trading. Oil
prices have made a good rebound this week to suggest the
market has put in a near-term bottom. That would be good
news for the raw commodity markets, including the precious
metals.

U.S. economic data due for release Friday includes real
earnings, the consumer price index, retail sales, the
University of Michigan consumer sentiment survey, and
manufacturing and trade inventories.

–Jim

U.S. STOCK INDEXES

S&P 500 June e-mini futures: Prices are slightly lower in
early U.S. trading, on profit taking after hitting a
contract and record high on Monday. The bulls still have the
solid overall near-term technical advantage. There are no
early clues that a market top is close at hand. The shorter-
term moving averages (4-, 9- and 18-day) are neutral early
today. The 4-day moving average is below the 9-day. The 9-
day is above the 18-day moving average. Short-term
oscillators (RSI, slow stochastics) are bearish early today.
Today, shorter-term technical resistance comes in at the
contract high of 2,403.75 and then at 2,415.00. Buy stops
likely reside just above those levels. Downside support for
active traders today is located at 2,375.00 and then at
2,360.00. Sell stops are likely located just below those
levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index June futures: Prices are slightly weaker in
early U.S. trading. Prices Tuesday hit a contract and record
high. Bulls have the solid overall near-term technical
advantage. 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 bearish
early today. Shorter-term technical resistance is seen at
the contract high of 5,687.75 and then at 5,700.00. Buy
stops likely reside just above those levels. On the
downside, short-term support is seen at this week’s low of
5,634.50 and then at 5,620.00. Sell stops are likely located
just below those levels. Wyckoff’s Intra-Day Market Rating:
4.5.

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are higher on short covering.
Prices are still in a three-week-old downtrend on the daily
bar chart. Shorter-term moving averages (4- 9- 18-day) are
bearish early today. The 4-day moving average is below the
9-day and 18-day. The 9-day is below the 18-day moving
average. Oscillators (RSI, slow stochastics) are bullish
early today. Shorter-term technical resistance is seen at
151 14/32 and then at 152 even. Buy stops likely reside just
above those levels. Shorter-term support lies at this week’s
low of 150 7/32 and then at 150 even. Sell stops likely
reside just below those levels. Wyckoff’s Intra-Day Market
Rating: 5.5

June U.S. T-Notes: Prices are higher in early U.S. trading,
on short covering. Shorter-term moving averages (4- 9- 18-
day) are bearish early today. The 4-day moving average is
below the 9-day and 18-day. The 9-day is below the 18-day
moving average. Oscillators (RSI, slow stochastics) are
bullish early today. Shorter-term resistance lies at
125.08.0 and then at this week’s high of 125.13.5. Buy
stops likely reside just above those levels. Shorter-term
technical support lies at the overnight low of 124.31.5 and
then at this week’s low of 124.23.0. Sell stops likely
reside just below those levels. Wyckoff’s Intra-Day Market
Rating: 6.0

U.S. DOLLAR INDEX

The June U.S. dollar index is near steady in early U.S.
trading. Bears have the slight overall near-term technical
advantage. The shorter-term moving averages for the dollar
index are neutral early today as the 4-day is above the 9-
day and 18-day. The 9-day is even with the 18-day moving
average. Short-term oscillators for the dollar index are
neutral to bullish early today. The dollar index finds
shorter-term technical resistance at this week’s high of
99.765 and then at 100.000. Shorter-term support is seen at
99.250 and then at 98.960. Wyckoff’s Intra Day Market
Rating: 5.0

NYMEX CRUDE OIL

June Nymex crude oil prices are near steady in early U.S.
trading. Bears still have the overall near-term technical
advantage. However, this week’s rebound suggests a near-term
market bottom is in place. Look for buy stops to reside just
above technical resistance at this week’s high of $48.22 and
then at $49.00. Look for sell stops just below technical
support at $47.50 and then at $47.00. Wyckoff’s Intra-Day
Market Rating: 5.0

GRAINS

Grain futures markets were slightly lower overnight. Trading
has been choppy recently. Weather in the Corn Belt is non-
threatening at present, which is bearish. But weather in the
Corn Belt can “change on a dime” in the spring and
summertime. Grain market bears still have the overall near-
term technical advantage.