Friday, March 17–Jim Wyckoff’s morning markets report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. While risk aversion has receded a bit late this week, by no mean is trader/investor risk appetite robust, amid the U.S. and European banking turmoil that is playing out. The latest development is First Republic Bank getting a $30 billion lifeline from other major U.S. banks, as well as support from the U.S. government. Reads a Wall Street Journal headline Friday: “Bank failures, like earlier shocks, raise odds of recession.”
In overnight news, China’s central bank eased its monetary policy by lowering its reserve requirement ratio for banks by 0.25%. This follows a move by the European Central Bank on Thursday to raise its main interest rate by 0.5%. The Federal Reserve’s FOMC meets next week and there is a debate in the marketplace regarding whether the Fed will raise its main interest rate by 25 basis points, or stand pat amid the U.S. and European banking crises. The rate hike by the ECB makes a 0.25% increase by the FOMC more likely.
Meantime, the Eurozone consumer price index for February came in up 8.5%, year-on-year, which was in line with market expectations and compares to the January CPI reading of up 8.6%.
The key outside markets today see the U.S. dollar index weaker. Nymex crude oil futures prices are higher and trading around $69.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.541%.
U.S. economic data due for release Friday includes industrial production and capacity utilization, leaning economic indicators and the University of Michigan consumer sentiment survey.
–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 neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below 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 high of 4,009.25 and then at 4,047.50. Support for active traders is seen at 3,950.00 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly up and hit a four-week high in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 12,767.75 and then at 12,924.25. On the downside, shorter-term support is seen at 12,500.00 and then at Thursday’s low of 12,314.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher 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 and 18-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 132 even and then at this week’s high of 133 16/32. Shorter-term support lies at the overnight low of 130 10/32 and then at 130 even. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher 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 and 18-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 114.21.0 and 115.00.0. Shorter-term technical support is seen at the overnight low of 114.01.5 and then at 113.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are slightly higher in early U.S. trading. 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 1.0750 and then at 1.0800. Shorter-term support is seen at this week’s low of 1.0580 and then at 1.0500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are higher in early U.S. trading, on a continued recovery after hitting a 15-month low Wednesday. Bears still have the firm overall near-term technical advantage. 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 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $70.00 and then at $71.00. Look for sell stops just below technical support at the overnight low of $68.07 and then at $67.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were higher overnight on short covering and perceived bargain hunting. Risk aversion this week has been limiting buying interest in grains. The big drop in crude oil prices this week to a 15-month low is an ominous, bearish “shot across the bow” of the entire raw commodity sector. Soybean market bulls have the slight overall near-term technical advantage. Corn and wheat bears have the firm overall chart advantage.
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