Monday, April 6–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The coronavirus outbreak that has crippled the global economy appears to be de-escalating a bit, according to some models that forecast the peak number of cases and deaths. However, the coming week is going to be “our Pearl Harbor moment, our 9/11 moment,” said U.S. Surgeon General Jerome Adams, regarding an expected wave of coronavirus deaths across the U.S. New York City, the U.S. Covid-19 epicenter, New Orleans and Detroit face especially tough days ahead.
The debate in the coming days, especially if the Covid-19 outbreak starts to de-escalate, will be when to restart the global economies. Traders and investors are also handicapping then the world economies will get back to full speed when they do start back up in earnest. There are complicated supply chains that have been severely disrupted the past few weeks.
Reports say the U.S. Treasury market and short-term securities market are operating more smoothly than a couple weeks ago, following the Federal Reserve’s massive injection of liquidity into those markets.
The important outside markets today see Nymex crude oil prices weaker and trading around $27.50 a barrel. There are reports that Russia and Saudi Arabia are close to a deal to cut their crude oil production levels, following pressure by President Trump to do so. OPEC officials are meeting today via a conference call to discuss production cuts. The U.S. dollar index is slightly higher this morning as the bulls have regained power. The 10-year U.S. Treasury note yield is trading around 0.65% Monday morning, up from Friday’s levels. Gold prices are solidly higher.
U.S. economic data due for release Monday includes the employment trends index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading. Bears still 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 to bullish early today. Today, shorter-term technical resistance comes in at 2,600.00 and then at 2,635.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,550.00 and then at 2,525.00. Wyckoff’s Intra-day Market Rating: 7.0
June Nasdaq index futures: Prices are sharply higher in early U.S. trading. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,870.00 and then at 7,995.00. On the downside, short-term support is seen at 7,700.00 and then at 7,600.00. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly down in early U.S. trading. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at 181 16/32 and then at the overnight high of 182 4/32. Shorter-term support lies at the overnight low of 180 18/32 and then at 180 even. Wyckoff’s Intra-Day Market Rating: 3.5
June U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still 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 to bearish early today. Shorter-term resistance lies at 138.24.0 and then at the overnight high of 139.01.0. Shorter-term technical support lies at the overnight low of 138.13.0 and then at 138.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher in early U.S. trading. Bulls have the firm 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 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 last week’s high of 100.965 and then at 101.250. Shorter-term support is seen at the overnight low of 100.535 and then at 100.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
May Nymex crude oil prices are lower in early U.S. trading. 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 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 $28.24 and then at last week’s high of $29.13. Look for sell stops just below technical support at the overnight low of $25.28 and then at $25.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early US pre-market trading. Grain traders remain focused on the coronavirus outbreak and are mostly ignoring the more normal micro supply and demand fundamentals that impact the grains. If the coronavirus outbreak starts to de-escalate, then grain market traders can begin to get back to examining their own micro supply and demand fundamentals. Technically, wheat and soybean bulls have the slight overall near-term technical advantage, with corn bears still in firm technical control. Traders today will closely examine the 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