Thursday, March 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward mixed to lower openings when the New York day session begins, on some mild profit taking after the Dow and S&P 500 stock indexes hit record highs Wednesday.
U.S. Treasury bond yields are on the rise again and the U.S. Treasury 10-year Treasury note yield hit 1.74% overnight–the highest level in well over a year. This is giving U.S. stock market traders pause Thursday morning.
Traders and investors are still digesting the Federal Reserve’s two-day Open Market Committee (FOMC) meeting that ended Wednesday afternoon. The FOMC statement said U.S. monetary policy had not changed, as expected (Fed funds rate seen at median 0.1% until the end of 2023.), but added U.S. economic growth and inflation prospects are picking up steam. The Fed raised its U.S. GDP projection to 6.5% growth in 2021, from 4.2%, and sees inflation at 2.4% annually in 2021, versus its last estimate of up 1.8%. The central bank said it will continue its present bond-buying program (quantitative easing) until substantial further progress is made on the Fed’s economic goals. The marketplace deemed the FOMC meeting and Fed Chairman Powell’s remarks in his press conference as favoring the dovish side of monetary policy more than expected, and a goldilocks scenario for the stock market. Still, many veteran market watchers think the Fed will be forced to raise U.S. interest rates before the two-year window has ended, given the present trajectory of U.S. inflation.
On the geopolitical front, the markets are not reacting much to news that President Biden has labeled Russian President Putin a “killer.”
The key “outside markets” today see Nymex crude oil futures prices a bit lower and trading around $64.35 a barrel. Meantime, the U.S. dollar index is firmer early today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading after hitting a contract and record high overnight. Bulls have the solid 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 early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,978.50 and then at 4,000.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,913.00 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are lower in early U.S. trading, on a corrective pullback from recent solid gains. 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 neutral early today. Shorter-term technical resistance is seen at 13,150.00 and then at this week’s high of 13,287.25. On the downside, shorter-term support is seen at 13,000.00 and then at this week’s low of 12,862.50. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 154 even and then at 155 even. Shorter-term support lies at the overnight contract low of 153 13/32 and then at 153 even. Wyckoff’s Intra-Day Market Rating: 3.0
June U.S. T-Notes: Prices are lower and hit a contract low 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 bearish early today. Shorter-term resistance lies at 131.16.0 and then at 131.24.0. Shorter-term technical support lies at the contract low of 131.05.5 and then at 131.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
EURO CURRENCY
The June Euro currency futures are lower in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.2014 and then at 1.2050. Shorter-term support is seen at this week’s low of 1.1905 and then at the March low of 1.1861. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
April Nymex crude oil prices are near steady in early U.S. trading. Bulls still have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at $65.00 and then at $66.00. Look for sell stops just below technical support at this week’s low of $63.60 and then at $63.13. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are weaker in early U.S. pre-market trading. Trading remains choppy as the grain traders await the very important March 31 USDA planting intentions and quarterly grains stocks reports. Grain market bulls still have the firm overall near-term technical advantage as prices are still mostly trending up—both on a near-term and longer-term basis. On tap today is the weekly USDA export sales report.
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