Friday, May 1–Jim Wyckoff’s Morning Markets Report
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. On this last trading day of the week and first day of the month, the past few days’ grim economic data and corporate earnings reports may be driving home to traders and investors the reality of the Covid-19-induced damage being inflicted on the global economy. Still, despite 30 million Americans losing their jobs the past few weeks, the U.S. stock indexes just finished one of their best months ever and are in near-term price uptrends on the daily charts. Some U.S. states are starting to partially reopen their businesses today.
U.S. President Trump is ramping up his negative rhetoric toward China and on Thursday again suggested China suppressed Covid-19 information in the early stages in China, even hinting China may have purposely unleased the virus from a laboratory. Trump also threatened more tariffs against China.
In other news, the European Central Bank said on Friday Euro zone economic growth could decline by 12% in 2020.
In the background and not yet impacting markets, but worth mentioning, is the extended absence in public of North Korea’s leader Kim Jong Un. In normal times this matter might get paid more attention by the marketplace.
The important outside markets see Nymex crude oil lower and trading around $18.35 a barrel in June futures. The oil market has made a strong rebound this week after the June contract hit a low of just above $10.00 on Tuesday. The U.S. dollar index is slightly weaker again today. The greenback bulls have faded badly this week. The 10-year U.S. Treasury note yield is trading around 0.6% this morning.
U.S. economic reports out today include the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, construction spending and auto industry sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading, on a corrective pullback after hitting a seven-week high Thursday. Bulls still have the near-term technical advantage as prices are in a near-term uptrend on the daily chart. The 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 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 overnight high of 2,879.75 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,830.75 and then at 2,800.00. Wyckoff’s Intra-day Market Rating: 3.5
June Nasdaq index futures: Prices are solidly lower in early U.S. trading, on a downside correction after hitting a two-month high Thursday. A price uptrend is still 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 8,861.50 and then at 9,000.00. On the downside, short-term support is seen at the overnight low of 8,725.25 and then at 8,600.00. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are modestly higher in early U.S. trading. Bulls have the firm technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 181 25/32 and then at this week’s high of 182 20/32. Shorter-term support lies at the overnight low of 180 23/32 and then at this week’s low of 180 3/32. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at this week’s high of 139.11.5 and then at 139.16.0. Shorter-term technical support lies at the overnight low of 138.30.0 and then at this week’s low of 138.17.0. 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 modestly lower in early U.S. trading. Bulls have the overall near-term technical advantage but are fading this week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above 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 99.500 and then at 99.800. Shorter-term support is seen at this week’s low of 98.815 and then at 98.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are modestly down in early U.S. trading, on a corrective pullback from this week’s strong gains. The bears still have the overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $20.48 and then at $21.00. Look for sell stops just below technical support at $17.00 and then at $16.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are lower in early US pre-market trading. The weaker global stocks markets are likely to weigh on the grain markets today. Grain bears remain in firm technical control. Expect more downside in the grain futures prices in the near term, amid global demand worries.
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