Tuesday, April 21–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The world marketplace is still buzzing and even shaken after Monday’s astonishing and historic trading action in Nymex crude oil futures, in which the expiring May contract fell deep into negative territory by the close—meaning the longs could be forced to take delivery of physical crude oil with no place to store it, and then they had to pay up to get rid of the oil—thus the May futures price trading at -$40 at one point. (More on this important matter in my bi-weekly newsletter that will be out Tuesday.) That price action in crude has buyers in many commodity markets even more leery early this week, which is also spilling over into selling pressure in global stock markets.
This is a busy week for U.S. corporate earnings, which are very likely to remind traders and investors of debilitating effects of the Covid-19 pandemic, even as some parts of the North American economy may be set to reopen soon.
The important outside markets today see June Nymex crude oil futures down around $4.00, or 35%, at $16.40. Brent crude oil futures are trading just above $18.00 and have dropped over 25% this week. The U.S. dollar index higher on safe-haven demand. The 10-year U.S. Treasury note yield is trading around 0.575% this morning—well down from levels seen recently and a sign of “flight to quality” amid higher anxiety in the marketplace at present.
U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and existing home sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower on profit taking after hitting a five-week high and closing at a bullish weekly high close last Friday. Prices are still in a near-term uptrend on the daily chart and the bulls still have the slight near-term technical advantage. 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 2,833.25 and then at last week’s high of 2,885.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,750.00 and then at 2,700.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. A price uptrend is still in place on the daily chart and the bulls are in control. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 8,763.00 and then at 8,800.00. On the downside, short-term support is seen at 8,600.00 and then at 8,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly higher and hit a two-week high in early U.S. trading. Bulls have the firm technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the April high of 182 31/32 and then at 184 even. Shorter-term support lies at the overnight low of 180 28/32 and then at Monday’s low of 180 1/32. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are higher and hit a six-week high in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral 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 bullish early today. Shorter-term resistance lies at the overnight high of 139.17.5 and then at 139.24.0. Shorter-term technical support lies at the overnight low of 139.02.5 and then at Monday’s low of 138.29.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the firm 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. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.535 and then at 100.750. Shorter-term support is seen at the overnight low of 100.030 and then at Monday’s low of 99.750. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are sharply lower and hit a contract low in early U.S. trading. The bears have the strong overall near-term technical advantage to suggest more downside in the near term. The shorter-term moving averages are bearish early today as the 4-day is below the 18-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $18.00 and then at $19.00. Look for sell stops just below technical support at $15.00 and then at $14.00. Wyckoff’s Intra-Day Market Rating: 1.0
GRAINS
US grain futures are lower in early US pre-market trading, with corn prices at contract lows. The astonishing free-fall in crude oil prices early this week is keeping grain market bulls on the sidelines. Weaker global stock markets so far this week are also bearish for the grains. Technically, wheat bulls have the near-term technical advantage, while soybeans and corn bears are in strong technical control.
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