Wednesday, March 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mostly down overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. There is some elevated risk aversion in the world marketplace at mid-week, mainly due to worries about slowing global economic growth.
In overnight news, the German government auctioned its 10-year note (bund) for an average yield of -0.05% versus a yield of 0.12% for bunds auctioned on Feb. 27, and the first negative yield since 2016. A feature in the marketplace recently has been falling government bond yields in the major industrialized countries. U.S. Treasury yields briefly inverted last week when the short-term 3-month note yield moved above the 10-year note yield. Today, U.S. T-Bond and T-Note futures prices hit contract highs.
There was more weak economic data coming out of China today, as its industrial profits for the first two months of this year dropped by 14%–the biggest drop since 2011. Lower factory gate prices and lower sales were blamed. U.S. tariffs on China’s imports into the U.S. are also likely to blame. The U.S. and China continue high-level trade negotiations beginning Thursday.
The key outside markets today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading around $59.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the international trade report and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the firm near-term technical advantage amid a price uptrend on the daily chart. 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 this week’s high of 2,835.00 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,806.00 and then at this week’s low of 2,789.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly down in early U.S. trading. Bulls still have the firm overall near-term technical advantage amid a price uptrend. 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 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 7,403.00 and then at this week’s high of 7,447.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 7,352.50 and then at this week’s low of 7,290.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit a contract high in early U.S. trading today. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 150 even and then at 150 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 149 even and then at the overnight low of 148 25/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are higher and hit a contract high overnight. 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 bullish early today. Shorter-term resistance lies at the contract high of 124.31.5 and then at 125.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.16.0 and then at the overnight low of 124.08.0. 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 near steady in early U.S. trading. Bulls still have the firm 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. The 9-day is below 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 the overnight high of 96.470 and then at 96.685. Shorter-term support is seen at this week’ low of 95.895 and then at 95.695. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
May Nymex crude oil prices are weaker in early U.S. trading, on profit taking. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $60.00 and then at last week’s high of $60.39. Look for sell stops just below technical support at Tuesday’s low of $59.04 and then at this week’s low of $58.33. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were mixed to mostly weaker overnight. Grain market bears have the overall near-term technical advantage. However, it does look like they have put in market bottoms recently. Flooding and wet fields in the Corn Belt have traders wondering about the acreage mix in the region. Friday sees some of the most important USDA reports of the year—the U.S. planting intentions and quarterly grain stocks reports.
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