Tuesday, March 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to firmer overnight, following the strong rebound in the U.S. stock market Monday. While the Covid-19, or coronavirus, outbreak appears to have slowed its rate of spread in China, the illness rate is growing outside of China, including South Korea, Italy and other countries. The marketplace is becoming more focused on what the major economies of the world are doing to prevent economic damage. Australia’s central bank cut its main interest rate overnight, while the Group of Seven finance ministers are holding a conference call today to discuss what to do about the outbreak’s impact on world economies. A statement from the G-7 will likely come following the phone call. President Trump again brow-beat the Federal Reserve in a tweet overnight, urging the U.S. central bank to lower interest rates. Many analysts are now saying the outbreak’s impact on global economies will be serious but the duration of the impact will be short. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
Many are wondering if Monday’s big gains in the U.S. stock indexes point to market bottoms being in place. Maybe. A more solid clue that near-term market bottoms are in place in the stock indexes (or any other market that has been beaten down the past few weeks) would be two very strong up-days in a row, or a bullish weekly high close on a Friday. Also, it’s very likely that higher market volatility will resurface, and probably soon. The Covid-19 outbreak has moved on and off the front burner of the marketplace many times over the past couple months, and such will likely continue for the near term.
The yield on the benchmark U.S. Treasury 10-year note rose to 1.150% Tuesday after hitting a record low of 1.031% Monday. Gold and silver prices are higher early Tuesday, following good gains Monday.
The key outside markets today see Nymex crude oil prices higher and trading around $48.35 a barrel in early trading. The U.S. dollar index is trading up today following recent strong selling pressure.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, the IBD/TIPP economic optimism index, and domestic auto sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are up in early U.S. trading. Bears still have the slight technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 3,100.00 and then at 3,125.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,037.00 and then at 3,025.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are higher in early U.S. trading. Bears are still in mild technical control. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 8,910.25 and then at 8,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,749.75 and then at 8,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower on profit taking after hitting a contract high Monday. Bulls still have the solid overall 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. 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 the overnight high of 170 19/32 and then at 171 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 169 2/32 and then at 168 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower on profit taking after hitting a contract high Monday. Bulls still have the solid overall 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 neutral to bearish early today. Shorter-term resistance lies at the overnight high of 134.31.5 and then at 135.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134.09.0 and then at 134.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher on a corrective bounce after hitting a four-week low Monday. A bearish V-top reversal pattern has formed on the daily bar chart. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 97.710 and then at 98.000. Shorter-term support is seen at the overnight low of 97.095 and then at Monday’s low of 96.870. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
April Nymex crude oil prices are solidly higher on short covering and bargain hunting after hitting a 14-month low Monday. 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 bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $48.66 and then at $49.00. Look for sell stops just below technical support at the overnight low of $47.31 and then at $47.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures are higher in early US pre-market trading Tuesday. Corn is 4 to 5 cents up, soybeans around 4 cents higher, and wheat steady to 3 cents higher. The global stock markets have stabilized early this week, which has assuaged grain market traders. The weaker U.S. dollar is also working in favor of the U.S. grain market bulls.
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