Tuesday, April 27–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins.
The main U.S. economic event of the week will be the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chair Powell. While no change in U.S. monetary policy is expected, the marketplace will closely scrutinize the Fed’s inflation outlook and any comments on the future path of monetary policy.
Speaking of inflation, in the raw commodity world let’s take a peek at what’s going on in several markets. Corn futures prices just hit a nearly eight-year high overnight, and are trading above $7.20 a bushel. Soybeans are also at a nearly eight-year and high nearing $16.00 a bushel, and wheat futures are at an eight-year high above $7.50 a bushel. Hog futures are at 6.5-year high. Copper futures are at a 10-year high, Chinese steel futures are at record highs, coffee futures prices hit a nearly four-year high this week, and lumber futures are at record highs. For perspective in lumber, the last bull run in 2018 saw futures prices hit a then-record-high of $659.00 per thousand board feet. This week prices have skyrocketed to $1,420.00 and are still climbing. Many Americans who wanted to build new homes this year are putting it off because lumber prices are too high. Those who think consumer and producer price inflation won’t become problematic down the road my want to ponder this paragraph.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are higher and trading around $62.35 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.577%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. house price index, the S&P-Case-Shiller home price indexes, the Richmond Fed business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and hit another contract and record high overnight. Bulls have the solid overall near-term technical advantage. There are no early clues to suggest a market top is close at hand. 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 to bullish early today. Today, shorter-term technical resistance comes in at the overnight record high of 4,192.50 and then at 4,200.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Monday’s low of 4,163.75 and then at 4,150.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are a bit firmer in early U.S. trading and very close to last week’s 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 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 the contract and record high of 14,059.50 and then at 14,100.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at Monday’s low of 13,865.50 and then at last week’s low of 13,700.50. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading today. Bears have the overall near-term technical advantage. However, recent sideways-to-higher price action at lower levels may be “basing” that puts in a market bottom. Prices are also in an uptrend on the daily chart. 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 bearish early today. Shorter-term technical resistance is seen at Monday’s high of 158 22/32 and then at the April high of 159 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 157 24/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are lower in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at Monday’s high of 132.16.0 and then at 132.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 132.05.0 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish today. The Euro currency finds shorter-term technical resistance at Monday’s high of 1.2129 and then at 1.2150. Buy stops likely reside just above those levels. Shorter-term support is seen at 1.2050 and then at 1.2000. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are firmer in early U.S. trading. Bulls have the overall near-term technical advantage but trading has turned sideways and choppy. The shorter-term moving averages are neutral early today as the 4-day is below 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 the overnight high of $62.74 and then at $63.00. Look for sell stops just below technical support at the overnight low of $61.91 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures are sharply up in early U.S. pre-market trading, with corn leading gainers and setting a nearly eight-year high. The grain markets are going “parabolic”—meaning nearly straight up. History suggests such price moves mean market tops are getting closer. China demand rumors, recent cold weather in the U.S. midsection and a bullish global supply and demand balance are fueling the grain market bulls. Stay tuned right here and in my afternoon reports, to get the very early clues on when the price trend may change.
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