Monday, June 7–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly firmer and European shares flat. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
In overnight news, China’s May exports were up 27.9%, year-on-year, while its imports in May were up 51.1%. Those numbers were not far from market expectations, and reiterate China’s strong rebound from the pandemic.
Other weekend news saw the Group of Seven industrialized nations finance ministers meeting agree to a minimum tax rate of 15% on global corporations, but most agree such is a long way from actually being implemented. Other news saw U.S. Treasury Secretary Yellen tell reporters the Biden administration’s spending package would be healthy for the economy, even if it causes higher interest rates and higher inflation.
The key outside markets today see the U.S. dollar index slightly higher. Nymex crude oil prices are weaker and trading around $69.25 a barrel after hitting a 2.5-year high of $70.00 overnight. Interestingly, reports say speculators are making heavy purchases of call options with $100 strike prices on Brent and Nymex crude oil futures, expecting both markets to surpass the $100 mark yet this year. Apparently these traders are calling the options purchases “lottery tickets.” The reports also say it is likely the reddit-style traders who are buying the calls–the traders who also ran Gamestop and AMC shares to unbelievable heights earlier this year. Most oil market veterans think Nymex crude presently at $70 is lofty. Playing the stock market is one thing but trading commodity futures markets is a whole different animal—just ask anyone who has traded both. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.58%.
U.S. economic data due for release Monday is light and includes the employment trends index and consumer installment credit.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady in early U.S. trading and not far from the recent record high. 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. 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 contract high of 4,228.25 and then at 4,250.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,180.00 and then at last week low of 4,155.50. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are near steady in early U.S. trading. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 13,772.00 and then at 13,804.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,685.00 and then at 13,600.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading today after hitting a four-week high overnight. Bears have the 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight of 157 25/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at 156 24/32 and then at 156 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at last week’s high of 132.07.5 and then at 132.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.26.0 and then at last week’s low of 131.18.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are slightly up in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are neutral today. The Euro currency finds shorter-term technical resistance at 1.2200 and then at 1.2238. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.2168 and then at last week’s low of 1.2127. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are slightly lower in early U.S. trading after hitting a 2.5-year high overnight. Bulls have the solid overall near-term technical advantage. 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 to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $70.00 and then at $71.00. Look for sell stops just below technical support at the overnight low of $68.93 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are sharply higher in early U.S. pre-market trading. Game on bulls: it’s a weather market! Grain market bulls have made a strong recovery from the May lows amid the serious weather market scare. The extended weather forecasts for through at least late-June are calling for warmer and drier weather conditions in much of the U.S. midsection. Expect more high daily volatility in the grain futures markets this week. Thursday comes the monthly USDA supply and demand report. Weekly USDA export inspections data is out today.
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