Wednesday, March 16–Jim Wyckoff’s Morning Markets Report
Global stocks markets were mostly higher overnight. The U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. News overnight that both Russia and Ukraine said there are signs of progress on their discussions to stop the war has boosted trader and investor risk appetite at mid-week. Reports said discussions include having Ukraine become a neutral country like Sweden. However, the shooting and shelling continues in Ukraine.
China and Asian markets rallied sharply overnight on comments from Chinese economic officials that the government will implement market-friendly policies and keep the capital markets running smoothly. Officials also said they wanted more transparency and predictability in their policies. The moves come as China has locked down cities due to the Covid virus again spreading rapidly. That has put price pressure on raw commodity futures markets this week, on notions of reduced demand coming from the world’s second-largest economy.
The U.S. data point of the week is the Federal Reserve’s FOMC meeting that began Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. It’s widely believed the Fed will raise its Fed funds rate by 0.25%–the first rate hike since 2018. Powell’s comments on the war and inflation will be closely scrutinized by the marketplace.
The key outside markets see Nymex crude oil prices lower and trading around $96.00 a barrel. Crude prices have backed way off from last week’s 14-year highs to strongly suggest oil prices have put in major tops. The U.S. dollar index is lower again today. The benchmark U.S. 10-year Treasury note is presently yielding 2.165%. U.S. Treasury yields are on the rise amid inflation fears that are high.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, retail sales, import and export prices, the NAHB housing market index, manufacturing and trade inventories and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading. Prices are still trending lower on the daily bar chart and the bears are in firm overall near-term technical control. 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 bullish early today. Today, shorter-term technical resistance comes in at last week’s high of 4,326.75 and then at 4,375.00. Support for active traders is seen at the overnight low of 4,239.90 and then at 4,200.00. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are higher in early U.S. trading, on short covering after hitting an 11-month low Tuesday. Bears are in solid overall technical control amid a price downtrend in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 13,858.00 and then at 14,000.00. On the downside, shorter-term support is seen at the overnight low of 13,417.25 and then at 13,000.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly up in early U.S. trading after hitting a contract low overnight. Bears are in command, to suggest more downside. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at Tuesday’s high of 153 13/32 and then at 154 even. Shorter-term support lies at the overnight contract low of 151 6/32 and then at 151 even. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are slightly higher in early U.S. trading but hit a contract low overnight. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at Tuesday’s high of 125.12.0 and then at 125.20.0. Shorter-term technical support lies at the overnight contract low of 124.10.5 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are higher in early U.S. trading. Bears still 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 below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1056 and then at 1.1100. Shorter-term support is seen at this week’s low of 1.0936 and then at 1.0900. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are slightly lower in early U.S. trading. Recent price action strongly suggests a major market top is in place. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish today. Look for buy stops to reside just above technical resistance at $100.00 and then at Tuesday’s high of $102.58. Look for sell stops just below technical support at this week’s low of $93.53 and then at $92.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures prices were mixed in early U.S. pre-market trading. Corn and soybean market bulls remain in firm technical control, but wheat is bearish. It’s my strong bias that crude oil and wheat futures have put in major market tops, and that makes it likely that corn and soybeans have done the same. Remember that just because markets may have put in tops, that does not mean that their prices cannot remain elevated for some time to come.
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