Wednesday, April 1–Jim Wyckoff’s Morning Markets Report
On this first day of April and of the second quarter, global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The first quarter saw the U.S. stock market see its biggest losses in 12 years.
Traders and investors are gloomier Tuesday following President Trump’s daily Covid-19 update late Tuesday afternoon, in which he delivered a more somber assessment of the situation. Trump said from 140,000 to 240,000 Americans will die from the illness, and that’s if citizens continue their distancing and home isolation. He said it’s going to be a “very rough” next couple weeks as the coronavirus is likely to peak in mid- to late-April. A best-case scenario appears to be the U.S. economy starting back up in May.
In overnight news, China got some more positive economic data Wednesday, as the Caixin manufacturing purchasing managers index (PMI) in March rose to 50.1 compared to 40.3 in February. A reading above 50.0 suggests growth in the sector. This news is a positive for those economies hit so hard by the coronavirus, as China’s economy has been able to stage a very swift recovery. However, more and more market watchers and media outlets are questioning the reliability of statistics coming out of China, especially those suggesting how fast its economy recovered from the coronavirus outbreak.
The Euro zone manufacturing PMI for March came in at 44.5, which was in line with market expectations and compares with February’s reading of 49.2.
The important outside markets today see Nymex crude oil prices lower and trading around $20.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are respected energy analysts saying there is still significantly more near-term downside potential in Nymex crude oil, amid a supply glut and a demand shock. The U.S. dollar index is solidly higher early this morning as the bulls are having a strong week. The 10-year U.S. Treasury note yield is trading around 0.61% Tuesday morning—down from Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. manufacturing PMI, the global manufacturing PMI, domestic auto industry sales, the ISM manufacturing report on business, construction spending and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading. Bears 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 above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,562.25 and then at 2,600.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,476.25 and then at 2,450.00. Wyckoff’s Intra-day Market Rating: 3.0
June Nasdaq index futures: Prices are solidly lower in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 7,700.00 and then at the overnight high of 7,773.50. On the downside, short-term support is seen at the overnight low of 7,527.25 and then at 7,500.00. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are sharply higher in early U.S. trading. Bulls have the firm 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 181 29/32 and then at last week’s high of 182 16/32. Shorter-term support lies at 180 16/32 and then at the overnight low of 179 22/32. Wyckoff’s Intra-Day Market Rating: 7.0
June U.S. T-Notes: Prices are higher and hit a three-week high in early U.S. trading. Bulls 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 bullish early today. Shorter-term resistance lies at the overnight high of 139.13.5 and then at 139.24.0. Shorter-term technical support lies at the overnight low of 138.25.0 and then at this week’s low of 138.11.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The June U.S. dollar index is solidly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field but the bulls have momentum. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above 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 this week’s high of 100.125 and then at 100.500. Shorter-term support is seen at the overnight low of 98.995 and then at this week’s low of 98.395. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
May Nymex crude oil prices are slightly higher in early U.S. trading. Bears have the solid overall near-term technical advantage amid a price downtrend in place. 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 early today. Look for buy stops to reside just above technical resistance at this week’s high of $21.89 and then at $22.50. Look for sell stops just below technical support at the overnight low of $20.00 and then at this week’s low of $19.27. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are lower in early US pre-market trading, amid the more downbeat trader and investor attitudes at mid-week. As a sign of the times, Tuesday’s USDA acreage and quarterly grain stocks reports—normally two of the most important reports of the year—were quickly brushed aside by grain traders, who remain squarely focused on the coronavirus outbreak and its dire economic and psychological consequences that have yet to fully play out. Technically, wheat and soybean bulls do still have the overall near-term technical advantage, with corn bears in technical control.
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