Friday, May 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were also mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders and investors are more risk averse on this last trading day of the week and heading into a three-day U.S. holiday weekend. The Covid-19 pandemic is seeing an alarming rise of cases in some countries, while North America and Europe appear to be “flattening the curve” of the rate of infections. U.S.-China tensions remain high. A new geopolitical element thrown into the mix is China’s threat to impose new national security laws in Hong Kong to thwart protesters there. Hong Kong’s main stock index, the Hang Seng, saw its worst day in nearly five years Friday—down over 5%.
China began its most important political event of the year late this week, the National People’s Congress. At the meetings Friday, Chinese officials said they won’t issue guidance on 2020 economic growth, acknowledging the severe economic damage inflicted on the world’s second-largest economy. Chinese authorities also implied that any more monetary policy stimulus may not be in the works, suggesting more pain for Chinese consumers. This news spooked the global marketplace and helped to sink stock markets and the crude oil markets.
The important outside markets see the U.S. dollar index solidly up early today on safe-haven demand. Nymex crude oil prices are sharply lower and trading around $32.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.67%.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the 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 to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,952.50 and then at this week’s high of 2,976.25. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,900.00 and then at this week’s low of 2,850.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are modestly lower in early U.S. trading on profit taking after hitting a 2.5-month high Thursday. A price uptrend is firmly in place on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 9,408 and then at this week’s high of 9,510.75. On the downside, shorter-term support is seen at the overnight low of 9,241.50 and then at this week’s low of 9,110.25. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have had a good week and have the overall technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 181 4/32 and then at 182 even. Shorter-term support lies at the overnight low of 179 24/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are up in early U.S. trading. Bulls have had a good week and have the solid 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 and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 139.13.5 and then at the May high of 139.21.0. Shorter-term technical support lies at the overnight low of 139.01.5 and then at 138.25.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is solidly up in early U.S. trading. Bulls 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 below the 9-day. The 9-day is above 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 100.000 and then at 100.250. Shorter-term support is seen at the overnight low of 99.400 and then at this week’s low of 99.030. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
July Nymex crude oil prices are sharply lower in early U.S. trading. Bulls still see a price uptrend in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $32.00 and then at $33.00. Look for sell stops just below technical support at the overnight low of $30.72 and then at $30.00. Wyckoff’s Intra-Day Market Rating: 3.5
GRAINS
US grain futures are lower in early U.S. pre-market trading. Tensions in China are bearish for the grains, too. Grain bears remain in overall technical control, even though market bottoms appear to be in place. Trading is very likely to remain sideways and choppy in the coming weeks.
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