Thursday, June 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. Risk appetite may be receding a bit late this week as Covid-19 cases in many U.S. states are on the rise, prompting concerns those states may have to once again impose restrictions on their businesses and the public. Reports said the second wave of the pandemic outbreak in Beijing, China has been quickly contained but other countries are seeing the virus spread.
Said one market analyst in a morning email dispatch, some of which has been edited for clarity: “Covid-19 and the Fed’s (and other central banks’) actions are influencing a herd mentality to financial markets where rational risk and reward calculations are no longer in place. The first sign of trouble sees investors flee to safe havens, and when the Fed plays the put (put option, meaning adding more stimulus), traders take the opposite side of the trade. This kind of environment will keep volatility heightened in the near term. In my opinion, the problem that the Fed and other central banks have caused over the past couple of months is that retail investors are bidding up some of the worst-performing companies just because they believe the current policies will keep them afloat…. This is leading to the creation of a big bubble in asset prices and the further it grows, the more damage it will make when it bursts.”
The important outside markets early today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are slightly up and trading around $38.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.71% level.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey and leading economic indicators.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls are recovering well from last week’s sell off and working to restart a price uptrend. 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 neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,156.25 and then at 3,177.75. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,064.50 and then at 3,025.00. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are slightly higher in early U.S. trading as the bulls are recovering well from late last week’s price pressure and are back near the recent record high. Shorter-term moving averages (4- 9-and 18-day) are back to 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 to bullish early today. Shorter-term technical resistance is seen at this week’s high of 10,047.50 and then at the record high of 10,140.00. On the downside, shorter-term support is seen at the overnight low of 9,866.50 and then at 9,700.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 177 7/32 and then at 178 even. Shorter-term support lies at the overnight low of 175 30/32 and then at this week’s low of 174 29/32. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are up in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 138.27.0 and then at 139.00.0. Shorter-term technical support lies at the overnight low of 138.16.0 and then at this week’s low of 138.07.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading. 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 last week’s high of 97.465 and then at 98.000. Shorter-term support is seen at the Wednesday’s low of 96.765 and then at this week’s low of 96.385. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are higher in early U.S. trading. A price uptrend on the daily chart has stalled out, at least temporarily. 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 neutral early today. Look for buy stops to reside just above technical resistance at this week’s high of $39.06 and then at $40.00. Look for sell stops just below technical support at the overnight low of $37.11 and then at Tuesday’s low of $36.38. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are firmer in early U.S. pre-market trading. Bulls have stabilized the corn and soybean markets this week but wheat prices have seen serious technical erosion—so much so that corn and soybeans will find it hard to sustain rallies, too. Traders will closely examine today’s weekly USDA export sales report, especially to see what China has purchased. Grain market bulls need a weather market to develop in the U.S. Corn Belt and the clock is ticking.
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