Tuesday, May 26–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. Traders and investors are upbeat early this week, following a long U.S. holiday weekend that saw more social interaction amid the unofficial start of summer. Such suggests quarantined people are gearing up to do more spending as businesses continue to reopen. Also, there is more hope following news of another Covid-19 vaccine that looks promising. Several drug companies are working at a fever pitch to develop a successful vaccine.
Still overshadowing the global marketplace is eroding U.S.-China relations. Barbs by both sides appear to have inflicted wounds too deep to just mask over. Some market watchers are predicting the U.S. and China will be the next major “cold war”—comparing the situation to the U.S.-Soviet Union stare-down that lasted decades.
China’s central bank this week has fixed its currency (the yuan) at a rate of 7.1293 to the U.S. dollar—the weakest in 12 years. Such is another move by Chinese officials that will not likely make the Trump administration happy.
The important outside markets see the U.S. dollar index solidly down early today. Nymex crude oil prices are higher and trading around $34.00 a barrel. The big rebound in crude oil prices has surprised many oil analysts and is a big positive for stock, commodity and financial markets. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.
U.S. economic data due for release Tuesday includes the Chicago Fed national activity index, the quarterly and monthly U.S. house price indexes, the S&P/Case-Shiller home price index, the consumer confidence index, new residential sales and the Texas manufacturing survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a 2.5-month high in early U.S. trading. Bulls have the firm overall near-term technical advantage and gained more power today. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 3,025.00 and then at 3,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,941.00 and then at last Friday’s low of 2,896.25. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are solidly higher and hit a three-month high in early U.S. trading. A price uptrend is firmly in place on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 9,600 and then at 9,700.00. On the downside, shorter-term support is seen at 9,500.00 and then at the overnight low of 9,392.50. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the overall technical advantage but trading has been sideways and choppy at higher levels for weeks. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 178 29/32 and then at last Friday’s high of 179 18/32. Shorter-term support lies at the overnight low of 177 17/32 and then at 177 even. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. Bulls have the solid overall near-term technical advantage but trading has been choppy and sideways at higher levels for weeks. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 138.31.5 and then at last Friday’s high of 139.04.5. Shorter-term technical support lies at the overnight low of 138.17.0 and then at last week’s low of 138.09.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is solidly down in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. 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 even with 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 99.500 and then at the overnight high of 99.790. Shorter-term support is seen at last week’s low of 99.020 and then at the May low of 98.855. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
July Nymex crude oil prices are higher in early U.S. trading. Bulls still see a price uptrend in place on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at last week’s high of $34.66 and then at $35.00. Look for sell stops just below technical support at the overnight low of $32.48 and then at $32.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures are mixed in early U.S. pre-market trading. Bearish is that tensions in China are on the rise. Traders today will focus on the weekly USDA export inspections report. Grain bears remain in overall technical control, even though market bottoms appear to be in place. Trading is very likely to remain sideways and choppy in the coming weeks.
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