Monday, May 20–Jim Wyckoff’s morning markets report
Risk aversion is a bit keener to start the trading week. Iranian President Ebrahim Raisi, the country’s foreign minister, and others were killed in a helicopter crash Monday. The crash was in a foggy, mountainous region of the country’s northwest, state media reported. It appears the helicopter had mechanical problems and that it was not shot down. Meantime, a Chinese oil tanker was hit by a Houthi missile in the Red Sea, adding to geopolitical tensions.
Gold prices hit a new record high overnight, at $2,454.20 an ounce, basis June Comex futures. Reports say Chinese speculators are snapping up gold at a torrid pace and that bullion from the West is moving to China to satisfy the strong demand. It could be that Chinese investors have soured on China’s economic prospects and China financial markets, including the unsteady yuan Chinese currency, and are purchasing safe-haven gold and silver. Chinese real estate investment dropped 9.8%, year-on-year, from January to April. Broker SP Angel this morning said “China is struggling to contain the impact of the collapse of two major property developers which have left thousands of unfinished properties in limbo. To compound the problem, many of these apartments have been sold with buyers supporting mortgages on properties they are not able to move into.”
Western speculators are also buying gold, silver and other commodity futures markets amid ideas the major central banks of the world will be able to ease their monetary policies in the coming months, which would spark better global economic growth that would then spur more demand for raw commodities.
Silver prices hit an 11-year high overnight, at $32.75 an ounce, basis July Comex futures. Comex copper futures hit a record high of $5.1990 a pound overnight, basis the July contract.
The key outside markets today see the U.S. dollar index slightly higher. Nymex crude oil prices are slightly down and trading around $79.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.42%.
There is no major U.S. economic data due for release Monday.
STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and not far below last week’s contract and record high. The shorter-term moving averages (4-day, 9-day 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 record high of 5,349.00 and then at 5,375.00. Support for active traders is seen at 5,266.25 and then at last week’s low of 5,216.75. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are a bit firmer in early U.S. trading and not far below last week’s contract and record high. 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the record high of 18,760.75 and then at 18,900.00. On the downside, shorter-term support is seen at 18,500.00 and then at 18,393.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady in early U.S. trading. 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 Friday’s high of 118 2/32 and then at the May high of 118 23/32. Shorter-term support lies at 117 even and then at 116 even. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are near steady in early U.S. trading. 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 resistance lies at Friday’s high of 109.18.5 and then at the May high of 109.31.5. Shorter-term technical support is seen at 109.00.0 and then at 108.24.0. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The June Euro currency futures are weaker in early U.S. trading. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the May high of 1.0909 and then at 1.0950. Shorter-term support is seen at last Friday’s low of 1.0849 and then at 1.0800. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are a bit weaker in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $80.39 and then at $81.00. Look for sell stops just below technical support at $78.00 and then at the May low of $76.70. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were higher overnight. Corn, HRW and SRW wheat, soybeans and soybean meal are all trending higher on the daily bar charts. On tap today is the weekly USDX export inspections report and the weekly USDA crop progress reports.
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