Friday, April 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were flat to weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. In a stark show of how much damage the coronavirus outbreak has done to the Euro zone economy in such a short period of time, the bloc’s March composite purchasing managers’ index (PMI)—which includes both the manufacturing and services sector—came in at a record low of 29.7 versus a reading of 51.6 in February. A reading below 50.0 suggests contraction.
The big U.S. data point this week will not be Friday’s monthly employment report–usually the most important data point of the month. That was Thursday’s weekly jobless claims report. The 6.6 million rise was about double the expected gain of just over 3 million, after rising 3.2 million last week. Today’s monthly unemployment report for March is expected to show an unemployment rate of 3.7% (3.5% in February) and a non-farm payrolls decline of 10,000 (up 273,000 in February). This would be the first decline in monthly non-farm payrolls in nine years. The monthly employment report for April is very likely to be much more grim than the March jobs data.
China’s central bank again eased its monetary policy Friday by lowering its reserve requirement ratio. The world’s second-largest economy has seen its central bank make several monetary policy stimulus moves over the past month.
The important outside markets today see Nymex crude oil prices higher and trading around $26.50 a barrel, on short covering and perceived bargain hunting after hitting an 18-year low of $19.27 a barrel Monday. Reports Friday said OPEC officials will meet next Monday via a conference call to discuss production cuts of at least 6 million barrels. OPEC members also said they may invite U.S. oil companies to join the call, and want them to commit to reducing their production, too. President Trump said Thursday there would be an agreement between the two major oil producers. Trump reportedly said a figure of 10-15 million barrels, while the Saudi Kingdom said that any cuts would not be that large. Trump is to meet with U.S. oil company executives Friday, and OPEC officials will be watching the results of that meeting very closely. Percentage-wise, Thursday’s rally in crude oil prices was the largest gain ever.
The U.S. dollar index is higher this morning as the bulls are having a very good week. The 10-year U.S. Treasury note yield is trading around 0.6% Friday morning.
Other U.S. economic data due for release Friday includes the U.S. services PMI, the ISM non-manufacturing report on business, and the global services PMI.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,524.00 and then at Wednesday’s high of 2,562.25. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 2,424.75 and then at 2,400.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. Bears have the overall near-term technical advantage. 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 7,651.50 and then at Wednesday’s high of 7,773.50. On the downside, short-term support is seen at this week’s low of 7,376.00 and then at 7,250.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading. Bulls have the solid 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 182 26/32 and then at 183 even. Shorter-term support lies at the overnight low of 181 16/32 and then at 181 even. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are modestly higher in early U.S. trading. Bulls have the solid technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 139.08.0 and then at this week’s high of 139.14.5. Shorter-term technical support lies at 138.25.0 and then at this week’s low of 138.11.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have regained the firm near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.885 and then at 101.000. Shorter-term support is seen at the overnight low of 100.240 and then at 100.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are higher in early U.S. trading, on follow-through buying from Thursday’s strong gains. A price downtrend on the daily bar chart has been negated. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $27.39 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: 6.0
GRAINS
US grain futures are mixed in early US pre-market trading. Not much new. Grain traders remain focused on the coronavirus outbreak and are mostly ignoring the more normal micro supply and demand fundamentals that impact the grains. Technically, wheat and soybean bulls have the slight overall near-term technical advantage, with 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