Tuesday, May 28–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly down overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins.
There are several matters on the minds of traders and investors following the long U.S. holiday weekend. The U.S.-China trade war continues with no agreement in sight and both countries appearing to dig in their heels as a trade agreement anytime soon appears unlikely.
European elections last weekend produced gains in the populist parties in the U.K., while Greece’s prime minister said he will call for a general election in an effort to lower taxes. It seems that every couple of years, during the summertime, that political turmoil in the European Union moves closer to the front burner of the world marketplace.
The key “outside markets” today see the U.S. dollar index trading higher, while Nymex crude oil prices are firmer and trading just above $59.00 a barrel. The greenback has been strong recently and the USDX is not far below its recent two-year high. Meantime, crude oil bulls are working to stabilize prices after last week’s steep downdraft that shaved about $6.00 off the price of a barrel of crude.
U.S. economic data due for release Tuesday includes the quarterly house price index, the S&P-Case-Shiller home price index, the consumer confidence index and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,840.00 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the May low of 2,799.75 and then at 2,780.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are lower in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,354.75 and then at 7,400.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 7,268.00 and then at 7,200.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage, to suggest more upside. 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 technical resistance is seen at the overnight contract high of 152 even and then at 152 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 151 16/32 and then at the overnight low of 151 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
June U.S. T-Notes: Prices are higher and hit a contract high overnight. Bulls have the solid 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 bullish early today. Shorter-term support lies at 125.00.0 and then at the overnight low of 124.29.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight contract high of 125.10.5 and then at 125.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the solid 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 neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.715 and then at 98.000. Shorter-term support is seen at last week’s low of 97.410 and then at 97.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are higher in early U.S. trading on a corrective bounce from sharp losses suffered last week. Bears have restarted a price downtrend on the daily chart. 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 $60.00 and then at $61.00. Look for sell stops just below technical support at the overnight low of $58.13 and then at last week’s low of $57.33. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were solidly higher in overnight trading, with corn hitting a nearly 12-month high and wheat at a three-month high. It’s a full-blown weather market in the grains, and it’s not even June yet. Soggy U.S. Midwest weather, and more of the same in the forecast in the next week, will keep many U.S. farmers out of their fields and continue to keep the seeding of corn at a pace that is the slowest in recent history. As each wet day in the Corn Belt passes, lower production levels for corn and soybeans are more likely and even highly probable now. Wheat futures will continue in a follower’s role. If soybeans and corn continue to rally, wheat will, too. Part of the gains in the grain market just recently are due to the large speculative “fund” futures traders getting squeezed out of their short positions that were record large just a few weeks ago. At some point, if not already, those funds will likely move to the long side of the grain markets. Traders will closely examine Tuesday morning’s weekly USDA export inspections 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