Monday, April 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
On this first day of the second quarter, Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite in the world marketplace remains elevated to start April.
In overnight news, China got some upbeat manufacturing data to boost Asian shares Monday. The Caixin-Markit China purchasing managers index (PMI) came in at 50.5 in March from 49.2 in February. A reading above 50.0 suggests growth in the sector.
In other overnight news, the Euro zone jobless rate was reported at 7.8% in February, which is unchanged from January and in line with market expectations. The Euro zone March consumer price index came in at up 1.4%, year-on-year, versus up 1.5% in February. The March CPI reading was just a bit below trade expectations, continuing a worldwide theme of very low inflation. Last autumn, notions among many economists and market watchers were growing that inflation was creeping back into the world marketplace, and possibly becoming problematic. Those ideas have all but disappeared now.
Minneapolis Federal Reserve Bank President Neel Kashkari said Monday now is not the time to lower U.S. interest rates. While he said risks to the U.S. economy have increased, Kashkari said the Fed needs more time to see if those risks pan out. He said he is worried about low inflation. Kashkari was interviewed by the Wall Street Journal and is one of the Fed’s more dovish members on U.S. monetary policy.
The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher, hit a 4.5-month high overnight and are trading around $60.50 a barrel.
It’s a busy day for U.S. economic reports Monday, including retail sales, the U.S. manufacturing purchasing managers index (PMI), manufacturing and trade inventories, construction spending, the ISM manufacturing report on business, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher in early U.S. trading today. Bulls have the firm near-term technical advantage amid a price uptrend on the daily chart. 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 bullish early today. Today, shorter-term technical resistance comes in at the March high of 2,866.00 and then at 2,880.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,844.50 and then at Friday’s low of 2,820.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage amid a price uptrend. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below 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 7,500.00 and then at the March high of 7,544.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,428.50 and then at 7,400.00. Sell stops are likely located 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 early today on more profit taking after hitting a contract high last week. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 149 21/32 and then at 150 even. Buy stops likely reside just above those levels. Shorter-term support lies at 149 even and then at 148 25/32. 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 in early U.S. trading on profit taking. Prices last week hit a contract high. 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 bearish early today. Shorter-term resistance lies at the overnight high of 124.05.5 and then at Friday’s high of 124.14.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.29.0 and then at 123.20.0. 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 weaker in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above 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 early today. The dollar index finds shorter-term technical resistance at last week’s high of 96.910 and then at the March high of 97.160. Shorter-term support is seen at 96.360 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
May Nymex crude oil prices are higher and hit a 4.5-month high in early U.S. trading. Bulls have the near-term technical advantage and are keeping a gentle uptrend in place on the daily bar chart. 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 bullish early today. Look for buy stops to reside just above technical resistance at $61.00 and then at $62.00. Look for sell stops just below technical support at the overnight low of $60.13 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were steady to firmer overnight on short covering. Traders will closely examine this morning’s USDA weekly export inspections report. Bears have the overall near-term technical advantage in the grains, and gained more power last week.
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