Thursday, May 4–Jim Wyckoff’s morning markets report
Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Risk aversion is keener late this week following another interest rate increase from the Federal Reserve Wednesday afternoon. The 0.25% hike in the Fed Funds rate was widely expected but it was no help for the U.S. banking system, parts of which are shaky. Reports now say PacWest Bancorp, a California-based lender, is in trouble. Its stock price saw a 60% decline in after-hours trading Wednesday. The bank is reported to be considering strategic options including a sale. PacWest is much smaller in size compared to failed Silicon Valley Bank and First Republic Bank. Still, this news is keeping U.S. banking turmoil on the front burner of the marketplace and keeping traders and investors nervous. Reads a Barrons headline today: “Powell says banking system is ‘sound and resilient;’ try telling that to PacWest investors.”
Comex gold futures prices hit a new record high of $2,085.40 an ounce overnight, on safe-haven demand.
The European Central Bank is meeting Thursday. The ECB is also expected to raise its main interest rate by a quarter-point.
The marketplace is now looking forward to Friday’s April U.S. jobs report from the Labor Department. The key non-farm payrolls number is forecast to come in at up 180,000 versus a rise of 236,000 in the March report. The U.S. ADP national employment report on Wednesday came in strong, showing 296,000 jobs were created in April, almost double the forecast.
The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices hit a 1.5-year low of $63.64 overnight but rebounded and are now a bit firmer and trading around $69.00 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.367%. Treasury yields have dipped this week on flight-to-quality buying amid the wobbly U.S. banking stocks.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the international trade report, preliminary productivity and costs, the global manufacturing PMI and the monthly chain store sales index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 4,167.00 and then at this week’s high of 4,206.25. Support for active traders is seen at last week’s low of 4,068.75 and then at 4,050.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 13,370.25 and then at 13,500.00 On the downside, shorter-term support is seen at 13,000.00 and then at the April low of 12,800.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer and hit a three-week high in early U.S. trading. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 133 even and then at 134 even. Shorter-term support lies at 132 even and then at Wednesday’s low of 131 16/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher and hit a four-week high in early U.S. trading. 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 neutral early today. Shorter-term resistance lies at the overnight high of 116.25.5 and then at the contract high of 117.01.5. Shorter-term technical support is seen at 116.00.0 and then at Wednesday’s low of 115.17.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at the April high of 1.1129 and then at 1.1200. Shorter-term support is seen at 1.1000 and then at this week’s low of 1.0972. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
June Nymex crude oil prices are slightly higher and hit a 1.5-year low of $63.64 in early U.S. trading. Prices are presently trading around $68.75. It appears the bears are now exhausted, however. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $70.00 and then at Wednesday’s high of $71.79. Look for sell stops just below technical support at $67.50 and then at $66.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were lower overnight. On tap today is the weekly USDA export sales report. Keener risk aversion in the general marketplace this week is keeping the grain market bulls timid. The technical postures for all the grain markets remain fully bearish. Generally good corn and soybean planting weather so far is bearish for the grains. Dry planting weather in most of the Corn Belt reminds grain market bears of the old adage: “Plant in the dust and your bins will bust.”
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