Friday, March 13–Jim Wyckoff’s Morning Markets Report
Most global stock markets rebounded Friday. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, following Thursday rout that saw the biggest daily losses in the Dow Jones Industrial Average since the 1987 stock market crash. U.S. stock indexes are still firmly in bearish territory—down more than 20% from their record highs scored in February.
Here’s the key question on veteran traders’ and investors’ minds: At what point will general capitulation occur in markets that have been pounded lower? That means traders/investors already under pressure to get rid of their rapidly depreciating assets just throw up their hands and succumb to the financial pressures on them, and sell—suggesting selling has finally become exhausted and market bottoms are in place. It can be argued that Thursday’s price action showed some signs of capitulation. There was “blood on the Street.” Safe-haven gold and U.S. Treasury bond and note futures prices were hammered Thursday as traders sold what assets they could after U.S. stock index futures trading was halted in morning dealings after prices locked down their daily trading limits. Said one trader of Thursday’s price action: “There was nowhere to hide.”
Psychologically, the cancellation Thursday of most major U.S. sporting and major public events for at least the next several weeks dealt the general trading/investing public a surprising blow that arguably won’t be topped during this crisis. If the U.S. stock indexes post good closing gains on this Friday the 13th, (right now that’s a big if), then there will be more than a few long-time market watchers, including this one, who will think this major global market shock has hit its climax, from a markets perspective. If so, markets next week would begin to stabilize and stock indexes likely will have put in their market-crisis bottoms.
Major central banks of the world on Friday continued to take actions to thwart the economic damage caused by the coronavirus outbreak that continues to spread, including in the U.S. Norway’s central bank lowered interest rates while the European Central Bank Friday worked to assuage European traders disappointed by the ECB’s stimulatory actions announced Thursday. The ECB said Friday that more actions by the bank are possible in the near term. Meantime, China’s central bank lowered its reserve requirement ratio for its banks, to free up more cash for consumer loans. These moves follow Thursday’s massive injection of short-term liquidity into the U.S. financial system by the Federal Reserve around midday.
The benchmark 10-year U.S. Treasury note sees its yield around 0.9% Friday, which is well up from Thursday’s reading and also suggestive of a stabilizing global marketplace. The U.S. dollar index is trading a bit weaker in early U.S. trading, but it appears the greenback is finally getting a safe-haven bid as marketplace anxiety levels rise. The Euro currency is slumping this week, as well as the “commodity currencies”—the Canadian dollar and the Australian dollar. The crypto currency market has been hammered this week, as Bitcoin prices late this week hit a nearly one-year low.
Nymex crude oil prices are solidly up Friday morning and trading around $33.00 a barrel.
U.S. economic data due for release Friday includes import and export prices and the University of Michigan consumer sentiment survey
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading after hitting a contract low overnight. Bears still have the solid overall near-term technical advantage amid a price downtrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below 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 the overnight high of 2,578.75 and then at 2,600.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,500.00 and then at 2,450.00. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are sharply up in early U.S. trading after hitting a contract low overnight. Bears still have the solid overall near-term technical advantage. 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 neutral to bullish early today. Shorter-term technical resistance is seen at 7,600.00 and then at 7,700.00. On the downside, short-term support is seen at 7,500.00 and then at 7,400.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly lower in early U.S. trading. Bulls still have the overall near-term technical advantage but a price uptrend on the daily chart is now in jeopardy. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at 178 even and then at 180 even. Shorter-term support lies at 175 even and then at 173 even. Wyckoff’s Intra-Day Market Rating: 3.0
June U.S. T-Notes: Prices are solidly lower in early U.S. trading. Bulls still have the firm overall near-term technical advantage amid a price uptrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term resistance lies at 138.00.0 and then at the overnight high of 138.16.0. Shorter-term technical support lies at the overnight low of 136.13.5 and then at 136.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher in early U.S. trading. Safe-haven demand has surfaced for the greenback late this week. Bulls now have the overall 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 bullish early today. The dollar index finds shorter-term technical resistance at 98.000 and then at this week’s high of 98.400. Shorter-term support is seen at the overnight low of 97.385 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are solidly higher in early U.S. trading. Bears are still in solid overall near-term technical control. A bear flag pattern has formed on the daily bar 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 to bullish early today. Look for buy stops to reside just above technical resistance at $34.00 and then at $35.00. Look for sell stops just below technical support at $32.00 and then at $31.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are solidly up in early US pre-market trading, on short covering and bargain hunting. Corn is around 4 cents higher, soybeans around 9 cents up, and wheat 6 to 7 cents higher. Grain bulls are creeping back into the futures markets. Grain traders will continue to focus on the coronavirus situation until it stabilizes from a markets perspective. That may be a while, or it could come soon. Today’s price action will be extra important on that notion. Grain market bears have the solid technical advantage at present, suggesting the path of least resistance for prices will remain sideways at best.
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