Monday, April 20–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The feature in overnight trading was a very sharp drop of over 25% in crude oil prices. Nymex crude oil hit a 21-year low of $13.31 a barrel. Just two months ago Nymex crude prices were above $60.00. North American storage facilities are full and there is no place to put new production, amid the huge drop in gasoline demand that has resulted in prices at the pump going for less than $1.00 a gallon at some locations. The overnight plunge in crude oil has added further tension to an already-anxious marketplace. This is a busy week for U.S. corporate earnings, which are very likely to remind traders and investors of debilitating effects of the Covid-19 pandemic.
In the U.S., more and more citizens, many of whom are out of work and running out of money, are demanding that governments reopen businesses.
China’s central bank on Monday again cut its key lending rate by 20 basis points, to 3.85%, in a further effort to resuscitate its crippled economy.
In other overnight news, the German Bundesbank said Germany, the strongest economy in the European Union, is facing a severe economic recession from which it is not likely to recover any time soon. The German central bank said the reason for the slow recovery is that that German government is likely to keep social distancing restrictions on its citizens until a vaccine is found for Covid-19. More economists are saying the expected economic recovery in North America will also be slower than the optimistic forecasts that were initially reckoned by many.
The other important outside markets today see the U.S. dollar index slightly higher. The 10-year U.S. Treasury note yield is trading around 0.632% this morning—down from levels seen late last week and a sign of higher anxiety in the marketplace at present.
U.S. economic reports due for release Monday include the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower on profit taking after hitting a five-week high and closing at a bullish weekly high close last Friday. Prices are still in a near-term uptrend on the daily chart and the bulls have the 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 to bearish early today. Today, shorter-term technical resistance comes in at 2,850.00 and then at last week’s high of 2,885.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,800.00 and then at 2,775.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower after hitting a six-week high last Friday. A price uptrend is still in place on the daily chart and the bulls are back in firm control. 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 overnight high of 8,837.00 and then at 8,900.00. On the downside, short-term support is seen at 8,600.00 and then at 8,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the firm technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at last week’s high of 182 1/32 and then at 183 even. Shorter-term support lies at the overnight low of 180 1/32 and then at 179 16/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at last week’s high of 139.14.0 and then at 139.24.0. Shorter-term technical support lies at 139.00.0 and then at 138.24.0. 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 higher in early U.S. trading. Bulls have the 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 even with 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 last week’s high of 100.390 and then at 100.750. Shorter-term support is seen at the overnight low of 99.750 and then at 99.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are sharply lower in early U.S. trading and hit a 21-year low of $13.02. The bears have the strong overall near-term technical advantage to suggest more downside in the near term. The shorter-term moving averages are bearish early today as the 4-day is below the 18-day and 18-day. The 9-day is below 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 $14.00 and then at $15.00. Look for sell stops just below technical support at $12.00 and then at $11.00. Wyckoff’s Intra-Day Market Rating: 1.0
GRAINS
US grain futures are mixed in early US pre-market trading, with corn and soybeans weaker and wheat posting good gains. The free-fall in crude oil prices to a 21-year low overnight will limit gains in grains today. Weaker global stock markets early this week are also bearish for the grains. Technically, wheat bulls have regained the near-term technical advantage, while soybeans and corn bears are still in 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