Wednesday, June 16–Jim Wyckoff’s Morning Markets Report
European stock markets were mostly flat overnight, with Asian shares a bit weaker. The marketplace is awaiting the conclusion of the Fed’s FOMC meeting this afternoon. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Record highs have been scored this week in the S&P 500 and Nasdaq stock index futures. The past several weeks have seen little risk aversion in the marketplace and that’s bullish for the global stock markets.
The Federal Reserve’s FOMC meeting that began Tuesday morning ends Wednesday afternoon with a statement and new economic projections. While no major changes are expected for U.S. monetary policy, focus will be on the Fed’s tenor on inflation prospects and when the central bank will start to taper its very easy money policies. Fed officials recently have hinted they will begin discussing a timetable for reducing its bond-buying program (quantitative easing) sooner rather than later.
Reports at mid-week say China is set to try to control inflated raw commodity prices. The government will intervene after copper, iron ore and coal prices rose to record highs recently. The state-owned Assets Supervision and Administration Commission (Sasac) ordered China’s businesses to control risks and limit their exposure to overseas commodity markets. Companies have been ordered to report their futures positions for Sasac. China also said its National Food and Strategic Reserves Administration will soon release stockpiles of metals including copper, aluminum and zinc. The metals will reportedly be sold directly to manufacturers. Copper futures prices have sold off sharply on the news.
China’s industrial output was reported up 8.8% in May, year-on-year, which was in line with market expectations.
In other overnight news, consumer prices in the U.K. rose 2.1% in in May, year-on-year–the highest level since July of 2019. The hot inflation number increased speculation about the timing of Bank of England tightening of its monetary policy.
Israeli warplanes carried out a series of strikes at Hamas militant sites in the Gaza Strip Wednesday, the first raids since a cease-fire ended the war with Hamas in May.
The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are also near steady and trading around $72.20 a barrel after hitting another 2.5-year high of $72.83 overnight. The key U.S. Treasury 10-year note yield is fetching 1.49%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, import and export prices, and the weekly DOE liquid energy stocks report. U.S. Treasury Secretary Yellen testifies to the Senate today on the Biden administration’s fiscal year 2022 budget.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady in early U.S. trading and near Tuesday’s record and contract 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 4,258.25 and then at 4,275.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,224.50 and then at last week’s low of 4,197.25. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
September Nasdaq index futures: Prices are slightly higher and not far below the record high hit on Tuesday. 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 to bearish early today. Shorter-term technical resistance is seen at the record high of 14,155.25 and then at 14,250.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 14,000.00 and then at 13,900.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are firmer in early U.S. trading. A price uptrend is in place on the daily chart and 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 early today. Shorter-term technical resistance is seen at this week’s high of 159 14/32 and then at last week’s high of 159 29/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 158 9/32 and then at 158 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
September U.S. T-Notes: Prices are slightly up in early U.S. trading. A price uptrend is in place on the daily chart. 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 early today. Shorter-term resistance lies at this week’s high of 132.29.5 and then at last week’s high of 133.06.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132.12.0 and then at 132.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The September Euro currency futures are slightly lower in early U.S. trading. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2169 and then at 1.2200. Buy stops likely reside just above those levels. Shorter-term support is seen at last week’s low of 1.2114 and then at 1.2081. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are a bit firmer in early U.S. trading and hit another 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 bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $72.83 and then at $73.50. Look for sell stops just below technical support at $72.00 and then at $71.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. Bulls are fading and need to step up yet this week. If not, major market tops could be in place. The extended weather forecasts are calling for a bit more rain in the U.S. Midwest next week, but nothing that would be considered a “drought-buster.” It’s still early in the growing season and don’t be surprised to see more fireworks in the grain futures in the coming weeks—on the upside and downside.
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