Tuesday, April 28–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading, while the U.S. stock indexes are pointed toward higher openings and at or near seven-week highs when the New York day session begins. Some regions in some countries, including the U.S., are reopening at least some businesses that have been shuttered from the Covid-19-induced lockdown. People around the globe are starting to suffer from what is being called “quarantine fatigue,” which means many are starting to ignore social-distancing guidelines and are eager to see economies reopen—while government leaders debate the timing of reopening commerce. Reports say U.S. automakers plan on restarting their plants on May 18.
A feature in the marketplace early this week is another big drop in crude oil prices, with Nymex crude presently trading around $11.85 a barrel. There is growing talk that Nymex crude prices will again fall into negative territory when the June contract nears expiration in late May. There is no place to store oil amid a glutted world market that has seen a historic demand shock. OPEC will begin its previously announced oil-production cuts later this week but that has had no positive impact on oil prices.
Key central bank meetings occur this week, including those of the Federal Reserve (FOMC) and the European Central Bank. The FOMC meeting begins today and ends Wednesday afternoon with a statement. The Fed over the past few weeks has aggressively flooded the U.S. financial system with liquidity. Market watchers will be keen to see what the FOMC statement says, including any new monetary policy moves. Key U.S. corporate earnings reports are also due out this week.
The other important outside markets today see the U.S. dollar index solidly lower. The greenback bulls are fading this week, partly on notions other major countries’ economies are coming back to life faster than that of the U.S. The 10-year U.S. Treasury note yield is trading around 0.65% this morning.
U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, advance economic indicators, the S&P/Case-Shiller home price report, the Richmond Fed business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher and hit a seven-week high in early U.S. trading. Price are in a near-term uptrend on the daily chart. 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 2,925.00 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,851.00 and then at Monday’s low of 2,812.75. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are higher in early U.S. trading. A price uptrend is 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 April high of 8,966.75 and then at 9,000.00. On the downside, short-term support is seen at the overnight low of 8,777.00 and then at Monday’s low of 8,730.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly weaker in early U.S. trading. Bulls still have the firm technical advantage. 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 neutral to bearish early today. Shorter-term technical resistance is seen at 181 even and then at Monday’s high of 182 3/32. Shorter-term support lies at 180 even and then at 179 16/32. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are slightly lower in early U.S. trading. Bulls still have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 Monday’s high of 139.01.5 and then at 139.07.5. Shorter-term technical support lies at the overnight low of 138.17.0 and then at 138.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The June U.S. dollar index is solidly lower in early U.S. trading. Bulls have the overall near-term technical advantage but are now fading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is above 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 100.000 and then at the overnight high of 100.295. Shorter-term support is seen at 99.250 and then at 99.000. Wyckoff’s Intra Day Market Rating: 3.0
NYMEX CRUDE OIL
June Nymex crude oil prices are sharply lower again in early U.S. trading. The bears have the solid overall near-term technical advantage. The shorter-term moving averages are bearish early today as the 4-day is below the 18-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $13.18 and then at $14.00. Look for sell stops just below technical support at the overnight low of $10.07 and then at $9.00. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
US grain futures are firmer in early US pre-market trading, on short covering after recent solid losses. It strongly appears last week’s price gains were just corrective bounces in bear markets for corn and soybeans. Wheat bulls are fading, too. Expect more downside in the grain in the near term, especially with raw commodity sector leader crude oil prices tanking again.
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