Tuesday, April 7–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. So far this week the global marketplace is more upbeat, as it appears the coronavirus outbreak that has crippled the global economy is de-escalating in Europe and the U.S. Some models are predicting infections in the U.S. and U.K. will peak in a week. The situation is by no means a good one at present but may be considered by traders and investors to not be as bad as some had been expecting. Also, health officials are stressing the Covid-19 outbreak could again escalate. British Prime Minister Boris Johnson has the illness and has been moved to an intensive care unit.
Japan has just announced an economic stimulus package totaling $1 trillion, to combat the economic damage inflicted by the coronavirus.
The well-known big hedge fund manager Bill Ackman, who three weeks ago gave an emotional TV interview and said “hell was coming” regarding Covid-19, has now tweeted the situation appears to be getting better.
If the Covid-19 outbreak continues to de-escalate, debate will intensify on when to restart the global economies. One respected Washington, D.C.-based analyst/economist is predicting President Trump will restart the U.S. economy on May 1. Trump has been saying for some time that “the cure cannot be worse than the disease.”
The important outside markets today see Nymex crude oil prices higher and trading around $27.15 a barrel. There are reports Russia and Saudi Arabia are close to a deal to cut their crude oil production levels. OPEC officials will meet via a conference call on Thursday to discuss production cuts. The U.S. dollar index is lower this morning on a corrective pullback from recent good gains. The 10-year U.S. Treasury note yield is trading around 0.74% Tuesday morning, well up from recent levels and also suggesting less anxiety in the marketplace. Gold prices are higher and hit a 7.5-year high of $1,724.40 overnight. It could be that gold bugs are looking over the horizon and anticipating problematic price inflation, what with all the money being pumped into the financial system by the major central banks of the world.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IDB/TIPP economic optimism index, and consumer credit.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly higher and hit a three-week high in early U.S. trading. Recent price gains suggest a near-term market bottom is in place. The 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 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 the overnight high of 2,745.00 and then at 2,775.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,700.00 and then at 2,650.00. Wyckoff’s Intra-day Market Rating: 7.0
June Nasdaq index futures: Prices are sharply higher and hit a three-week high in early U.S. trading. Recent gains suggest a market bottom is in place. 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 overnight high of 8,303.25 and then at 8,400.00. On the downside, short-term support is seen at 8,200.00 and then at 8,100.00. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly down again in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading this week. 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 technical resistance is seen at 179 even and then at 180 even. Shorter-term support lies at 178 16/32 and then at 178 even. Wyckoff’s Intra-Day Market Rating: 3.5
June U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall technical advantage but are now fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-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 138.15.0. Shorter-term technical support lies at the overnight low of 137.24.5 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The June U.S. dollar index is lower in early U.S. trading. Bulls still have the firm 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 neutral early today. The dollar index finds shorter-term technical resistance at 100.500 and then at the overnight high of 100.830. Shorter-term support is seen at the overnight low of 99.985 and then at 99.750. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
May Nymex crude oil prices are higher in early U.S. trading. A price downtrend on the daily bar chart has been negated. The shorter-term moving averages are neutral early today as the 4-day is above 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 Monday’s high of $28.24 and then at last week’s high of $29.13. Look for sell stops just below technical support at Monday’s low of $25.28 and then at $25.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are again mixed in early US pre-market trading. If the coronavirus outbreak continues to de-escalate, grain market traders will begin to get back to examining their own micro supply and demand fundamentals, such as Thursday’s monthly USDA supply and demand report and weekly export sales report. Technically, wheat bulls have the overall near-term technical advantage, with soybeans in a neutral posture and corn bears still in firm 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