Wednesday, May 8–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly lower in anxious trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The U.S.-China trade war that is on the brink of escalation has roiled the world marketplace this week. Chinese trade officials are due in the U.S. today to continue discussions. President Trump said a deal needs to be done by late this week, or else he will impose new tariffs on Chinese imports into the U.S.
In overnight news, Iran’s government said it will stop complying with some commitments it made in the United Nations nuclear deal in 2015. The U.S. pulled out of the agreement last year and put more sanctions on Iran—namely it’s oil exports. This week the U.S. sent a naval task force to the Persian Gulf, including an aircraft carrier, due to what the U.S. said were threats against the U.S. in the region.
The U.S.-China trade war and the U.S.-Iran heightened tensions have put geopolitics back on the front burner of the marketplace, and it’s bearish for most markets.
China reported today its exports showed a surprising drop of 2.7% in April, year-on-year, compared to a 14.2% gain in March. China’s imports rose 4.0% in the same period. This economic data seems to underscore the damage to China’s economy from several months of U.S. tariffs on Chinese imports.
The key “outside market” today see the U.S. dollar index slightly lower. Meantime, Nymex crude oil prices are weaker and trading just above $61.00 a barrel.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, an ISM semi-annual forecast on business and the economy, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still have the near-term technical advantage but a price uptrend on the daily chart has been at least temporarily negated, to suggest a market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 2,900.00 and then at 2,920.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,862.50 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage but a price uptrend on the daily bar chart has been at least temporarily negated to suggest a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,698.00 and then at 7,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,581.25 and then at 7,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit a five-week high in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9- and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 149 16/32 and then at 150 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 148 14/32 and then at 148 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher and hit a five-week high in early U.S. trading. 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 bullish early today. Shorter-term resistance lies at 124.08.0 and then at 124.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.00.0 and then at the overnight low of 123.26.0. 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 lower early today. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.510 and then at last week’s high of 98.865. Shorter-term support is seen at this week’s low of 97.135 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are slightly weaker in early U.S. trading. Bulls are fading to suggest a market top is in place. 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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $62.95 and then at $64.00. Look for sell stops just below technical support at this week’s low of $60.04 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were narrowly mixed overnight. Grain market bears have the solid overall near-term technical advantage. Focus is on U.S.-China trade discussions that begin today in Washington, and Corn Belt weather, which mostly wet right now and causing planting delays. Traders are also awaiting Friday morning’s USDA supply and demand report.
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