Tuesday, May 7–Jim Wyckoff’s Morning Markets Report
World stock markets were mixed in cautious trading overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
The stock, financial and commodity markets are trying to recover from the surprise developments on the U.S.-China trade front that saw President Trump threaten new tariffs on imported Chinese products. However, the marketplace is somewhat assuaged Tuesday morning as the Chinese trade delegation is still headed for Washington, D.C. for talks this week, including their chief negotiator. Also, upon reflection, many traders and investors are wondering if Trump’s threatening tweets on Sunday were just a negotiating tactic. Still, Trump’s trade advisors said Monday that the Chinese commitments on trade had seen “erosion.”
Trump tweeted that some degree of a trade deal with China needs to happen by the end of this week, or new tariffs go into effect. It’s a very hard read on the outcome of this matter. Thus, the keener uncertainty among traders and investors will play better into the hands of market bears.
Gold and silver markets bulls have been disappointed their safe-haven metals did not see more demand amid the heightened geopolitical uncertainty that includes the potential U.S.-China trade war escalation but also increased U.S.-Iran tensions. However, reports say demand from major gold-consuming country India is expected to be significantly higher on the geopolitical tensions, especially as this is the time of stronger seasonal demand for gold.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading just below $62.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IDB/TIPP economic optimism index, and consumer credit.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still have the near-term technical advantage but a price uptrend on the daily chart is in jeopardy. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Monday’s high of 2,938.25 and then at 2,950.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,900.00 and then at Monday’s low of 2,883.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage but a price uptrend on the daily bar chart is in jeopardy. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at Monday’s high of 7,817.50 and then at the April high of 7,879.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,735.00 and then at 7,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
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- and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 148 14/32 and then at Monday’s high of 148 24/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 147 21/32 and then at 147 16/32. Sell stops likely reside just below those levels. 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 neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at 124.00.0 and then at last week’s high of 124.04.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 123.18.0 and then at 123.12.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher early today. 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 below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 97.465 and then at last week’s high of 98.865. Shorter-term support is seen at the overnight low of 97.135 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
June Nymex crude oil prices are weaker in early U.S. trading. Bulls are fading. 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 bearish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $62.95 and then at $64.00. Look for sell stops just below technical support at $61.00 and then at Monday’s low of $60.04. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures were weaker overnight. Grain market bears have the solid overall near-term technical advantage. Bears may be close to being exhausted, however. Focus is on U.S.-China trade discussions and Corn Belt weather, which is a mixed bag now.
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