Friday, May 27–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, following solid gains posted Thursday. Bullish weekly high closes in the U.S. stock indexes today would be one technical clue that near-term market bottoms are in place. Today will be an extra-important trading day for the stock indexes.
The data point of the day is the April personal income and outlays report, including the closely watched core personal consumption expenditures (PCE) component, which measures inflation. The PCE is seen coming in at up 4.9%, year-on-year, compared to the March reading of 5.2%.
China’s President Xi Jinping’s strict zero covid and other socialist policies risk severely damaging China’s economy. That apparently prompted Premier Li Keqiang’s speech to the nation this week. The premier warned China’s economy is at a critical point and called on officials to work hard for second-quarter economic growth to reduce unemployment. China watchers note it is unprecedented for a premier to challenge the policies of the president. Over 200 million Chinese citizens have been living under lockdown restrictions, which is causing increasing unrest in the world’s second-largest economy.
The key outside markets today see Nymex crude oil futures prices weaker and trading around $113.50 a barrel. Meantime, the U.S. dollar index is slightly up in early trading. The yield on the 10-year U.S. Treasury note is fetching 2.75%.
U.S. economic data due for release Friday includes personal income and outlays, the University of Michigan consumer sentiment survey and advance economic indicators.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading, following good gains on Thursday. Prices are still in a two-month-old downtrend on the daily bar chart, but just barely.
A bullish weekly high close today would be one clue that a near-term market bottom is in place. Bears still have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 4,050.00 and then at 4,100.00. Support for active traders is seen at 4,000.00 and then at Thursday’s low of 3,960.50. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are slightly higher in early U.S. trading, following good gains Thursday. A bullish weekly high close today would be one clue that a near-term market bottom is in place. Prices are still in a two-month-old downtrend on the daily bar chart but now just barely. Bears still have the firm overall technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 12,400.00 and then at 12,594.00. On the downside, shorter-term support is seen at 12,200.00 and then at 12,000.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Bears are still in overall near-term technical control but the bulls have momentum as a fledgling price uptrend is in place. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 142 22/32 and then at 143 even. Shorter-term support lies at the overnight low of 141 17/32 and then at 141 even. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Bears are still in overall near-term technical control but the bulls have momentum as a fledgling price uptrend is in place. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 120.31.0 and then at 121.08.0. Shorter-term technical support lies at the overnight low of 120.16.0 and then at 120.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are weaker in early U.S. trading after hitting a four-week high overnight. Bears still have the overall near-term technical advantage but the bulls have some momentum to suggest a market bottom is in place. The shorter-term moving averages for the Euro 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 for the Euro are neutral today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.0772 and then at 1.0800. Shorter-term support is seen at 1.0650 and then at 1.0600. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are slightly lower in early U.S. trading after hitting a 2.5-month high overnight. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $114.99 and then at the March high of $116.33. Look for sell stops just below technical support at $112.00 and then at $110.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures prices were mixed to weaker in early U.S. pre-market trading. Grain market bulls have the overall near-term chart advantage but are fading amid the generally keener risk aversion in the marketplace that has sparked heightened U.S. recession fears. Bearish weather patterns in the U.S. Midwest and Plains (rain) are also keeping the bulls at bay. It could well be that the grains will languish for the next month, awaiting a possible summertime weather market that can occur right after the Fourth of July holiday.
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