Friday, April 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to mostly firmer in overnight trading. U.S. stock indexes are pointed toward sharply higher openings and five-week highs when the New York day session begins. Traders and investors are more upbeat to end the trading week. President Trump Thursday afternoon laid out plans to reopen the U.S. economy in stages that could begin as early as today, as there are early signs the Covid-19 pandemic in North America and Europe has hit a peak for new infections. Also, there is new hope that a drug being tested by Gilead can greatly reduce the severity of the respiratory illness, based on early clinical trials. As one market analyst put it, the marketplace is presently viewing the Covid-19 situation as “the glass being half-full.”
In overnight news, there was more dour economic data coming out of China Friday, as the world’s second-largest economy in March saw its industrial production down 8.4% versus down 13.5% in February, year-on-year. Retail Sales in the same period were off 19.0% compared to down 20.5% in February. Gross domestic product growth in the first quarter was minus 6.8% versus a year ago. The GDP figure was China’s first negative number ever recorded.
In a sign of the still-very-turbulent economic times, luxury retailer Neiman Marcus could not make a bond payment this week as the pandemic keeps its stores shuttered. The company is now in default, suggesting bankruptcy is next.
The important outside markets today see crude oil prices solidly lower and trading around $18.50 a barrel–an 18.5-year low. The U.S. dollar index is higher again this morning as the greenback bulls are having a good week. The 10-year U.S. Treasury note yield is trading around 0.65% this morning. Safe-haven gold prices are solidly lower amid the better risk appetite in the marketplace late this week.
U.S. economic reports due for release Friday are light and include the leading economic indicators report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly higher and hit a five-week high in early U.S. trading. Prices are in a near-term uptrend on the daily chart and the bulls have the 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,885.00 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,850.00 and then at 2,800.00. Wyckoff’s Intra-day Market Rating: 7.0
June Nasdaq index futures: Prices are higher and hit a six-week high in early U.S. trading. A price uptrend is in place on the daily chart and the bulls are back in firm 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 8,966.75 and then at 9,000.00. On the downside, short-term support is seen at the overnight low of 8,859.00 and then at 8,750.00. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the 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 neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 181 22/32 and then at 182 even. Shorter-term support lies at the overnight low of 179 16/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are lower in early U.S. trading, but bulls still have the 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 neutral early today. Shorter-term resistance lies at this week’s high of 139.13.0 and then at 139.24.0. Shorter-term technical support lies at the overnight low of 138.17.0 and then at 138.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 100.390 and then at 100.750. Shorter-term support is seen at 100.000 and then at the overnight low of 99.730. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
May Nymex crude oil prices are solidly lower in early U.S. trading and hit an 18.5-year low. 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 bearish early today. Look for buy stops to reside just above technical resistance at $20.00 and then at the overnight high of $20.22. Look for sell stops just below technical support at the overnight low of $18.03 and then at $17.50. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
US grain futures are mixed in early US pre-market trading, on some more tepid short covering. Crude oil dropping to an 18.5-year low overnight will limit gains in grains today. Rallying global stock markets late this week may help to stabilize the grain futures, but still-crippled global economies remain a major bearish fundamental element for the grain markets. Don’t look for fresh price uptrends to develop any time soon. Technically, wheat bulls and bears are on a neutral playing field, while soybeans and corn bears in 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