Wednesday, April 8–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. This week, as global stock markets have rebounded, it’s becoming more apparent to more than a few veteran traders/analysts that many markets are close to, or already have, factored into their prices the general economic impact of the coronavirus pandemic. Of course, nobody ever knows for sure on calling market bottoms or tops, or knowing the ultimate economic impact of major shock events. Still, there are emerging technical signals in several major markets that do suggest they have put in near-term bottoms, if not major bottoms. The U.S. stock indexes are in this category.
At mid-week on this holiday-shortened week (Markets are closed for Good Friday.) traders and investors are seeing their risk appetite wane as the Covid-19 continues its destructive human toll. The U.S. saw 50% more citizens die from the coronavirus Tuesday than any other day. The U.S. and Europe are hoping the models suggesting the next week will be the worst, regarding new virus infections, are correct, and that the curve will have then peaked for them.
In overnight news, European stocks were pressured by a survey that suggested Germany’s gross domestic product would decline by nearly 10% in the second quarter.
The important outside markets today see Nymex crude oil prices higher and trading around $24.35 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. An agreement is not a certainty and now the amount of production cuts is in question. The U.S. dollar index is higher this morning. The 10-year U.S. Treasury note yield is trading around 0.72% Wednesday morning.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report and the FOMC minutes from the last Fed meeting.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. Recent price gains have started a fledgling uptrend on the daily chart and also 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 neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,680.50 and then at 2,700.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,620.75 and then at 2,600.00. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are slightly higher in early U.S. trading. Recent gains suggest a market bottom is in place, including a price uptrend starting 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 8,143.00 and then at 8,200.00. On the downside, short-term support is seen at the overnight low of 7,953.25 and then at 7,900.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are weaker again in early U.S. trading. Bulls are fading badly this week. 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 technical resistance is seen at the overnight high of 180 3/32 and then at Tuesday’s high of 180 20/32. Shorter-term support lies at 178 16/32 and then at this week’s low of 177 28/32. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are weaker in early U.S. trading. Bulls are fading this week. 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 the overnight high of 138.09.5 and then at Tuesday’s high of 138.15.0. Shorter-term technical support lies at this week’s low of 137.16.0 and then at 137.10.0. 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 firmer in early U.S. trading. Bulls still have the 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 to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.510 and then at Tuesday’s high of 100.830. Shorter-term support is seen at this week’s low of 99.715 and then at 99.500. Wyckoff’s Intra Day Market Rating: 6.0
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 and trading has turned choppy. 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 early today. Look for buy stops to reside just above technical resistance at $26.00 and then at $27.00. Look for sell stops just below technical support at this week’s low of $23.54 and then at $23.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are higher in early US pre-market trading, on short covering. A good week, so far, for global stock and financial markets has been good for the grain market bulls. Grain traders want 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