Tuesday, May 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, led by the technology sector. Some so far just routine profit-taking pressure is seen in the indexes that have been trending higher. Some market analysts are blaming worries about problematic inflation for the pullback in stock markets this week. The U.S. consumer price index is out on Wednesday morning and will be closely scrutinized. Forecasts call for April CPI to be up 0.2% from March and up 3.6%, year-on-year.
While the major economies of the West have not yet been reporting inflation numbers that are concerning, China has just reported its producer prices climbed at the fastest pace in 3.5 years in April, reflecting a big rise in input costs. Producer prices rose 6.8%, year-on-year in April, up from 4.4% in March. China’s consumer price index increased 0.9% year-on-year in April, with demand continuing to improve compared to a 0.4% reading recorded in March. Meantime, China’s central bank raised the yuan currency fix against the U.S. dollar to 6.4254, giving some relief to importers of commodities. Around 100 steel mills in China have raised their prices, reflecting strong demand and rising iron ore prices. The rise in steel prices may threaten a range of downstream industries.
In other news, the closely watched German ZEW economic expectations index for May came in at 84.4 versus 70.7 in April and forecasts for a reading of 71.0.
The key outside markets today see the U.S. dollar index weaker and trading not far above Monday’s 2.5-month low. Meantime, Nymex crude oil prices lower and trading around $64.30 a barrel. The U.S. Colonial pipeline system that has been shut down due to a cyberattack is set to reopen temporarily. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.606%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the NFIB small business index. Some Federal Reserve officials are speaking today.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading on profit taking after hitting a record high Monday. Bulls still have the solid overall near-term technical advantage. There are no strong, 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 4,185.50 and then at 4,200.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the May low of 4,120.50 and then at 4,100.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower and hit a six-week low in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 13,344.50 and then at 13,500.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,140.00 and then at 13,000.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are weaker in early U.S. trading today. Bears have the 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 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at this week’s high of 158 12/32 and then at 159 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 2/32 and then at 156 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are slightly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at this week’s high of 132.30.5 and then at 133.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.14.5 and then at 132.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The June Euro currency futures are firmer 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 bullish early today. The Euro currency finds shorter-term technical resistance at Monday’s high of 1.2187 and then at 1.2200. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.2131 and then at 1.2100. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $65.02 and then at this week’s high of $65.75. Look for sell stops just below technical support at Monday’s low of $63.95 and then at last week’s low of $62.91. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are mostly higher in early U.S. pre-market trading. Prices Monday saw heavy profit taking after recent good gains. The grain market bulls still have the solid overall near-term technical advantage amid price uptrends still in place on the daily and the longer-term charts. It could be that the still-bullish supply and demand fundamentals in the grains are close to being fully factored into futures market prices. Remember that big bull markets in grain need to be fed fresh fundamental news fairly often.
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