Tuesday, May 2–Jim Wyckoff’s morning markets report
Global stock markets were mixed overnight. Some European markets and mainland China remained closed for a holiday. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The U.S. stock index bulls are enjoying price uptrends on the daily bar charts and index prices are not far below this year’s highs.
In overnight news, U.S. Treasury Secretary Janet Yellen has warned the U.S. government could be in default on some of its payments by June 1 if the debt limit is not increased. Reports said President Biden is calling congressional leaders to the White House to discuss the matter.
Traders are anxiously awaiting the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is expected to raise its main U.S. interest rate (the Fed funds rate) by 0.25%. The European Central Bank also meets Thursday. The ECB is also expected to raise its main interest rate by a quarter-point. Also, on Friday comes the U.S. employment situation report from the Labor Department. Corporate earnings reports continue to flow out this week, including Apple’s results.
A Barrons story today says: “Markets seem convinced the Federal Reserve will deliver one more quarter-point hike Wednesday before a lengthy pause. But investors buying into that school of thought should heed a cautionary tale from Down Under. Australia’s central bank shocked investors with a 25 basis-points hike Tuesday, also warning that more rises may be needed—sticky inflation was to blame.” The Barrons story said the marketplace thought the Reserve Bank of Australia was done raising rates after it hiked by 25 basis points in April. Two better-than-expected U.S. manufacturing reports on Monday seem to corroborate the Barrons story that more than just one quarter-point U.S. rate hike is in the cards.
In other overnight news, the Euro zone April consumer price index came in at up 7.0%, year-on-year versus up 6.9% in March. The April reading was in line with market expectations.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are lower and trading around $75.25 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.538%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail indexes, manufacturers’ shipments and inventories, the job openings and labor turnover (JOLTS) survey, and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 4,206.25 and then at the February high of 4,244.00. Support for active traders is seen at 4,150.00 and then at last Friday’s low of 4,131.50. Wyckoff’s Intra-day Market Rating: 5.0
June Nasdaq index futures: Prices are slightly up in early U.S. trading after hitting an eight-month high Monday. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 13,370.25 and then at 13,500.00 On the downside, shorter-term support is seen at 13,150.00 and then at 13,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 131 26/32 and then at last week’s high of 132 21/32. Shorter-term support lies at this week’s low of 129 2/32 and then at 128 16/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 115.00.0 and then at this week’s high of 115.13.5. Shorter-term technical support is seen at this week’s low of 114.10.0 and then at 114.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are slightly lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1066 and then at the April high of 1.1129. Shorter-term support is seen at 1.0947 and then at 1.0900. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at last Friday’s high of $76.82 and then at $78.00. Look for sell stops just below technical support at last week’s low of $73.93 and then at $72.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were firmer overnight on short covering. The technical postures for all the grain markets remain bearish. Generally good corn and soybean planting weather so far is bearish for the grains. Growing U.S. and/or global recession fears are also keeping the grain market bulls timid at present.
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