Wednesday, June 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings and three-month highs when the New York day session begins. The awkward rallies in world stock indexes continue, amid a pandemic that has severely damaged major economies, the two largest economies in the world (U.S. and China) on the verge of another trade war or worse, and civil unrest in the U.S. and Hong Kong. Many market watchers believe the stock market rallies are being fueled by “cheap money” served up by major central banks, and at some point down the road there will be a reckoning.
It was a calmer night in America Tuesday, following recent nights of violence in major cities. Still, it could be a long, hot and restless summer in the U.S., reminiscent of the infamous summer of 1968.
In the U.S. and Europe there continues to be hope the pandemic has seen its peak for infections and businesses continue to reopen. The next couple weeks will be critical to see if more public interaction recently will spike infections—but so far that’s not the case. Meanwhile, scientists are working feverishly on a vaccine and on drugs that will diminish the illness.
In other overnight news, there was better economic news coming out of China, as its Caixin purchasing managers services index (PMI) came in at 55.0 in May from 44.4 in April and reaching the highest level in 10 years. A reading above 50.0 suggests growth in the sector. In the Euro zone the PMI rose to 30.5 in May from 12.0 in April. India’s was 12.6 from 5.4 and Japan’s was 26.5 from 21.5 in the same period. The U.S. services PMI is out later today and is seen at 44.0 in May from 41.8 in April.
The data point of the day in the U.S. will be the ADP national employment report for May, expected to show job losses at just under 9 million.
The important outside markets see the U.S. dollar index lower early today and hitting an 11-week low overnight. Nymex crude oil prices are higher, at a nearly three-month high, and trading around $36.65 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. services PMI, the ISM non-manufacturing report on business, manufacturers’ shipments and inventories, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a three-month high in early U.S. trading. Bulls have the solid 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at 3,100.00 and then at 3,125.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,063.25 and then at Tuesday’s low of 3,024.50. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher and hit a 13-week 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 the February high of 9,765.25 and then at 9,800,00. On the downside, shorter-term support is seen at Tuesday’s low of 9,494.75 and then at this week’s low of 9,437.25. 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 slight overall technical advantage but are fading and need to show fresh power soon. 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 177 12/32 and then at Tuesday’s high of 178 1/32. Shorter-term support lies at the May low of 176 10/32 and then at 176 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 138.28.0 and then at 139.00.0. Shorter-term technical support lies at the overnight low of 138.18.0 and then at 138.13.5. 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 lower and hit an 11-week low in early U.S. trading. Bears have downside momentum. 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 bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 97.875 and then at this week’s high of 98.290. Shorter-term support is seen at the overnight low of 97.275 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly lower in early U.S. trading and did hit an 11-week high overnight. A price uptrend remains in place on the daily bar chart and the bulls still have upside momentum. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $38.18 and then at $39.00. Look for sell stops just below technical support at Tuesday’s low of $35.28 and then at $35.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed to firmer in early U.S. pre-market trading. Bulls need a weather market in the U.S. Midwest to develop. While so far very good early-season planting and growing weather has been seen for the U.S. corn, soybean and wheat crops, long-range forecasts for the month of June are calling for warmer and drier than normal conditions for much of the U.S. Midwest. More years than not in the U.S. Corn Belt, a weather market develops.
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