Wednesday, March 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower Wednesday and U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. The higher volatility, yo-yo daily trading action recently favors the bearish camp. The coronavirus outbreak continues to spread, including in the U.S., where major conventions are being cancelled, some colleges are telling students to go home and U.S. airlines are reducing flights substantially.
The Bank of England cut its key interest rate by 0.5% overnight and the U.K. government said it is set to implement economic stimulus measures. The marketplace was a bit upset Tuesday when the Trump administration failed to announce any U.S. economic stimulus measures after President Trump hinted such might occur.
The general public and traders and investors’ perceptions of the human and economic tolls of the Covid-19 near-pandemic are darkening by the day. Traders hate uncertainty, and the marketplace still does not have any grasp of how the coronavirus situation will ultimately play out from a markets perspective.
The Saudi Arabia-Russia oil-price war and its global energy and economic ramifications remain on traders’ minds, and would normally be on the front burner of the marketplace if not for the coronavirus scare. Traders are wondering if the two major global oil producers might soon meet to reconcile their differences, as it appears both countries are “cutting off their nose to spite their face.”
The benchmark 10-year U.S. Treasury note sees its yield around 0.725% Wednesday, which is down from Tuesday’s reading. On Monday the U.S. 10-year note hit a record low yield of 0.387%.
The U.S. dollar index is trading weaker in early U.S. trading following sharp gains Tuesday. Nymex crude oil prices are down and trading around $33.25 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the consumer price index, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are sharply lower in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below 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 the overnight high of 2,857.75 and then at Tuesday’s high of 2,873.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,766.75 and then at 2,750.00. Wyckoff’s Intra-day Market Rating: 3.5
June Nasdaq index futures: Prices are sharply down in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below 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 8,325.50 and then at Tuesday’s high of 8,366.50. On the downside, short-term support is seen at the overnight low of 8,072.25 and then at 8,000.00. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the firm 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 the overnight high of 182 19/32 and then at 183 even. Shorter-term support lies at the overnight low of 178 17/32 and then at 178 even. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the firm 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 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 138.00.0 and then at the overnight high of 138.19.0. Shorter-term technical support lies at the overnight low of 137.07.0 and then at 137.00.0. 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 sharply modestly down in early U.S. trading. Bears have the overall 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 early today. The dollar index finds shorter-term technical resistance at this week’s high of 96.465 and then at 97.000. Shorter-term support is seen at the overnight low of 95.810 and then at 95.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
April Nymex crude oil prices are lower in early U.S. trading. Bears are in overall near-term technical control. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $36.35 and then at $37.00. Look for sell stops just below technical support at $33.00 and then at $32.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early US pre-market trading. Corn is around 2 cents lower, soybeans around 2 cents up, and wheat 2 to 3 cents down. Grain traders are held hostage by what the global stock and financial markets are doing, and will continue to focus on such until the coronavirus situation stabilizes from a markets perspective. Grain market bears have the technical and psychological advantage at present, suggesting the path of least resistance for prices will remain sideways to lower.
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