Wednesday, May 27–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 remain upbeat at mid-week. After two months or more of being mostly quarantined the citizens of major industrialized countries are eager to get back to their pre-Covid-19 ways of life and are seeing light at the end of the tunnel. The global stock markets are trading like they expect the world’s consumers to get back to old spending habits sooner rather than later. Still, tens of millions of workers in the major global economies have been idled by the pandemic-induced closure of businesses. A significant number of lost jobs are gone for good.
Many in the general public still can’t rationalize world stock markets that have recovered so strongly in the face of many businesses that are still closed and up to 30% of countries’ workers are unemployed. One explanation is that the mammoth monetary stimulus programs from the major central banks that have pumped so much money into global financial systems is seeing a lot of that money flowing back into stock markets.
The important outside markets see the U.S. dollar index weaker early today. The greenback bulls are fading this week. Nymex crude oil prices are lower and trading around $34.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Goldman Sachs and Johnson Redbook retail sales reports, the Richmond Fed business survey, and the Federal Reserve’s beige book.
–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. 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 3,050.00 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,975.00 and then at Tuesday’s low of 2,941.00. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher 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 neutral to bullish early today. Shorter-term technical resistance is seen at 9,500 and then at Tuesday’s high of 9,587.50. On the downside, shorter-term support is seen at the overnight low of 9,368.50 and then at 9,300.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 177 26/32 and then at 178 even. Shorter-term support lies at 177 even and then at the May low of 176 10/32. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly 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 138.27.0 and then at 139.00.0. Shorter-term technical support lies at Tuesday’s 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: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker and hit a two-month low in early U.S. trading. Bulls are fading this week. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 99.300 and then at Tuesday’s high of 99.790. Shorter-term support is seen at the overnight low of 98.710 and then at 98.500. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
July Nymex crude oil prices are weaker 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 bearish early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $34.81 and then at $35.00. Look for sell stops just below technical support at Tuesday’s low of $32.48 and then at $32.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are firmer in early U.S. pre-market trading. China purchasing U.S. soybeans Tuesday, along with more upbeat marketplace attitudes, are friendly for the grain markets at mid-week. Still, even though market bottoms are likely in place for the grains, don’t look for significant price uptrends to develop anytime soon. Very good early-season planting and growing weather for the U.S. corn, soybean and wheat crops is a major bearish fundamental.
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