Thursday, June 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down overnight following the surprisingly hawkish FOMC meeting results from the Federal Reserve Wednesday afternoon that roiled many markets, including equities. The Fed left U.S. monetary policy unchanged, as expected. However, more FOMC members are now leaning toward raising interest rates sooner than they reckoned earlier this year due to a stronger-rebounding U.S. economy, the receding pandemic and inflation worries. On the inflation front, the Fed said prices are rising but still not at a problematic rate. The Fed sees inflation in 2021 at 3.4% annually, up a full 1% from the 2.4% estimate forecast earlier this year. Recent U.S. inflation reports are running significantly hotter than the 3.4% annual Fed projection on inflation. At Fed Chairman Jerome Powell’s press conference, he did not assuage inflation worries, ostensibly saying the Fed really does not know how much or for how long inflationary pressures will be on the rise. Gold prices tanked to a five-week low, the U.S. dollar index rallied sharply and hit a two-month high and bond and note yields up-ticked. The yield on the benchmark U.S. 10-year Treasury note is fetching 1.56% Thursday morning, after trading below 1.5% earlier this week.
Meantime, Brazil’s central bank raised its benchmark interest rate for the third consecutive time to thwart accelerating inflation. The rate was increased by 75 basis points, to 4.25%. The central bank is planning another 75 basis point rise at its next meeting in August. Meantime, inflation in Brazil rose to 8.1% in May, which is more than double this year’s goal of 3.75%.
The other key outside market today sees Nymex crude oil prices are down a bit and trading around $71.80 a barrel after hitting a 2.5-year high of $72.99 Wednesday.
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 weaker in early U.S. trading, on profit taking, and not far below Tuesday’s record and contract high. Bulls still have the solid overall 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 4,241.50 and then at the contract high of 4,258.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,183.00 and then at 4,160.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are weaker in early U.S. trading, on mild profit taking, and not far below the record high hit on Tuesday. 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 to bearish early today. Shorter-term technical resistance is seen at 14,000.00 and then at the record high of 14,155.25. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 13,830.25 and then at 13,750.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. A price uptrend is in place on the daily chart and bulls have the slight overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 159 even and then at this week’s high of 159 14/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 157 12/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are weaker in early U.S. trading and hit a four-week low overnight. A price uptrend on the daily chart has been negated. 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 neutral to bearish early today. Shorter-term resistance lies at 132.00.0 and then at 132.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.14.0 and then at 131.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The September Euro currency futures are solidly lower and hit a two-month low in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are bearish early today. The Euro currency finds shorter-term technical resistance at 1.2000 and then at the overnight high of 1.2026. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1946 and then at 1.1900. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
Nymex crude oil prices are weaker in early U.S. trading on mild profit taking after hitting a 2.5-year high on Wednesday. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $72.29 and then at this week’s high of $72.99. Look for sell stops just below technical support at the overnight low of $71.33 and then at $71.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are sharply lower in early U.S. pre-market trading. Bulls are fading fast to suggest major market tops might be in place. The extended weather forecasts are calling for a bit more rain in the U.S. Midwest next week, but nothing that would be considered a “drought-buster.” The strong rebound in the U.S. dollar index this week is bearish for the grains, making U.S. grains more expensive on the world market. It’s still early in the growing season and don’t be surprised to see more fireworks in the grain futures in the coming weeks—on the upside and downside.
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