Thursday, April 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were narrowly mixed in overnight trading. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. This is the last trading day of the week for most markets, ahead of the Good Friday holiday and the Easter weekend. Stock market bulls have had a good week. The U.S. stock indexes have seen near-term price uptrends develop, which suggest at least near-term lows are in place. While the Covid-19 pandemic continues to kill thousands worldwide, the rate of the spread of the illness appears to be slowing. The question among traders and investors now is, if the curve of infections has indeed flattened when will governments restart their crippled economies. May 1 is probably the most optimistic date for a partial U.S. economy restart.
In focus today is an OPEC (plus Russia) teleconference meeting to discuss significant crude oil production cuts. Latest reports say Russia is planning a big cut. Many oil market watchers are looking for a collective cut of 10 to 15 million barrels a day. A Texas oil regulator said his state could also cut its oil production. Speculation that major cuts in global oil production will be agreed upon by the major producers has rallied the crude oil futures markets the past week. Nymex crude oil prices are higher and trading around $26.50 a barrel. Prices last week dropped below $20.00.
Other important markets see the U.S. dollar index weaker this morning. The 10-year U.S. Treasury note yield is trading around 0.73% Thursday morning. Gold prices are solidly higher and trading above $1,700.00 an ounce.
Said one email dispatch from a metals analyst Thursday morning: “ Metals supply/demand balances are a moving target right now, with daily news on mines closing in Mexico, Chile, Peru, South African and Zambia as well as other locations. Metals supply has also been disrupted through boarder closures, port and shipping issues. Many containers remain stranded, making shipments yet more complicated. Hedge funds and CTAs have reduced positions ahead of the Easter break and as the supply/demand picture becomes less clear. Lower demand in China and the West was a major driver on the downside for metals traders. China is now restocking and Germany is coming out of lockdown, showing the way to recovery. Nations with shorter lockdowns will likely gain economic advantage over their trading competitors.”
U.S. economic data due for release Thursday includes the weekly jobless claims report, which has become the most important U.S. data point. Today’s weekly jobless number is expected to show a rise of around 5 million. Other reports out today include the producer price index, monthly wholesale trade, monthly chain store sales and the University of Michigan consumer sentiment survey. Federal Reserve Chairman Jerome Powell will also conduct a webinar today on the impact of the coronavirus on the U.S. economy.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading but did hit a three-week high overnight. Recent price gains have started a fledgling uptrend on the daily chart and also suggest a near-term market bottom is in place. 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 overnight high of 2,769.25 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Wednesday’s low of 2,620.75 and then at 2,600.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly lower in early U.S. trading. Recent gains suggest a market bottom is in place, including a price uptrend starting 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 8,273.00 and then at this week’s high of 8,303.25. On the downside, short-term support is seen at 8,100.00 and then at 8,000.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 179 even and then at Wednesday’s high of 180 3/32. Shorter-term support lies at the overnight low of 177 18/32 and then at 177 even. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Wednesday’s high of 138.09.5 and then at Tuesday’s high of 138.15.0. Shorter-term technical support lies at this week’s low of 137.16.0 and then at 137.10.0. 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 slightly weaker in early U.S. trading. Bulls still have the 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 100.345 and then at Tuesday’s high of 100.830. Shorter-term support is seen at this week’s low of 99.715 and then at 99.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
May Nymex crude oil prices are solidly higher in early U.S. trading. A price downtrend on the daily bar chart has been negated and trading has turned choppy. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $27.00 and then at $28.00. Look for sell stops just below technical support at $26.00 and then at $25.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
US grain futures are higher in early US pre-market trading, on more short covering and perceived bargain hunting. A good week for global stock and financial markets has been good for the grain market bulls. Grain traders want to get back to examining their own micro supply and demand fundamentals, such as Thursday’s monthly USDA supply and demand report and weekly export sales report. Technically, wheat bulls have the overall near-term technical advantage, with soybeans in a neutral posture and corn bears still in firm technical control.
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