Wednesday, March 6–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were narrowly mixed overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The world marketplace remains in a generally “risk-on” mood.
Traders and investors are awaiting U.S. trade data due to be released shortly, as it could provide clues on the impact on the U.S. economy from the U.S.-China trade war. The consensus forecast for the U.S. trade deficit in December is $57 billion, overall.
In overnight news, the Paris-based OECD think tank released a report saying a finalized U.S.-China trade deal is not likely to give the world economy a significant boost. The report said even if a deal is reached between the world’s two largest economies, there will remain uncertainty over matters that the trade deal is not likely to address, such as China’s rules for U.S. companies doing business in China. The OECD also reduced its growth projections for most of the major world’s economies for this year and in 2020. The report predicts overall world economic growth at 3.3% this year, which is down from the OECD’s last projection in November of 3.5% growth for 2019.
Attention of the marketplace is turning to the European Central Bank’s regular monetary policy meeting on Thursday. The ECB is expected to loosen its purse strings and provide more low-interest financing to Euro zone banks in order to stimulate an anemic Euro zone economy.
The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000.
The key outside markets today see the U.S. dollar index slightly firmer. The greenback bulls have regained technical strength recently. Nymex crude oil prices are lower and trading around $56.00 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the international trade in goods and services report, the Federal Reserve’s beige book, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Prices are in an uptrend on the daily bar chart and the bulls have the near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,825.75 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,772.50 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly lower in early U.S. trading. Prices are in an uptrend on the daily bar 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 7,241.00 and then at 7,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,167.00 and then at this week’s low of 7,103.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady in early U.S. trading today. Bulls have faded recently. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 144 24/32 and then at 145 even. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 143 28/32 and then at this week’s low of 143 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are slightly up in early U.S. trading. 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 neutral early today. Shorter-term resistance lies at the overnight high of 122.01.5 and then at 122.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 121.20.0 and then at this week’s low of 121.15.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher in early U.S. trading. Bulls have the firm 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 Tuesday’s high of 96.435 and then at the February high of 96.685. Shorter-term support is at Tuesday’s low of 96.100 and then at this week’s low of 95.795. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are weaker in early U.S. trading. Trading has been choppy and sideways recently. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $57.19 and then at last week’s high of $57.88. Look for sell stops just below technical support at $55.50 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were slightly weaker overnight. Bulls want more specifics on China’s commitment to buy U.S. ag products, and have been disappointed by the low level of Chinese purchases of U.S. ag products after that country had recently pledged to purchase more U.S. goods. Traders are awaiting Thursday morning’s weekly USDA sales data, and Friday morning’s USDA monthly supply and demand report.
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