Thursday, May 28–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading, with European shares mostly higher and Asian shares mostly lower. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins. There is a bit more risk aversion in the marketplace Thursday, as China’s government has ratified what is calls a national security law that ostensibly tightens mainland China’s grip on Hong Kong. The move has further angered the U.S. as relations between the two largest economies in the world continue to deteriorate. The U.S. Secretary of State on Wednesday said Hong Kong was no longer autonomous from China, implying the U.S. may revoke Hong Kong’s favorable trade status. Such would have big implications for the many major U.S. companies doing business in Hong Kong. The U.S. House of Representatives Wednesday passed a bill that would sanction China for its oppression of minority groups.
The important outside markets see the U.S. dollar index weaker early today. Nymex crude oil prices are lower and trading around $32.15 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.7%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, expected to show a new claims of around 2 million; the second estimate of first-quarter GDP, durable goods orders, the weekly DOE liquid energy stocks report, the Kansas City Fed manufacturing survey, and pending home sales.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are near steady and hit a 2.5-month high in early U.S. trading. Bulls have the firm overall 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 and 18-day. The 9-day is above 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 3,050.00 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,000.00 and then at this week’s low of 2,941.00. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are a bit weaker in early U.S. trading. A price uptrend is firmly in place on the daily chart. 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 9,500 and then at this week’s high of 9,587.50. On the downside, shorter-term support is seen at 9,300.00 and then at this week’s low of 9,167.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Bulls have the overall technical advantage but trading has been sideways and choppy at higher levels for weeks. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Wednesday’s high of 178 10/32 and then at this week’s high of 178 29/32. Shorter-term support lies at the overnight low of 177 5/32 and then at this week’s low of 176 19/32. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage but trading has been choppy and sideways at higher levels for weeks. 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 neutral to bullish early today. Shorter-term resistance lies at this week’s high of 139.01.0 and then at 139.08.0. Shorter-term technical support lies at the overnight low of 138.21.0 and then at this week’s low of 138.13.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker in early U.S. trading. Bulls are fading this week. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day. The 9-day is below 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 Wednesday’s high of 99.310 and then at this week’s high of 99.790. Shorter-term support is seen at this week’s low of 98.710 and then at 98.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are weaker in early U.S. trading. Bulls are fading late this week but still see a price uptrend in place on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above 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 early today. Look for buy stops to reside just above technical resistance at $33.00 and then at $34.00. Look for sell stops just below technical support at the overnight low of $31.14 and then at $30.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. Deteriorating U.S.-China relations has put a cap on grain price rallies. While market bottoms are likely in place for the grains, don’t look for significant price uptrends to develop anytime soon. More likely is a sideways grind until a weather market in the U.S. Midwest develops this summer. But so far very good early-season planting and growing weather is seen for the U.S. corn, soybean and wheat crops, which is a major bearish fundamental.
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