Wednesday, May 15–Jim Wyckoff’s Morning Markets Report
World stock markets were mixed overnight, with European indexes mostly down and Asian stocks mostly higher. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Traders and investors are somewhat assuaged at mid-week following more upbeat comments from President Trump and China officials Tuesday that suggested the world’s two largest economies want an amenable resolution soon in their trade war.
Economic data coming out of China today showed more decelerating growth. It’s industrial production, retail sales and fixed-asset investment all slowed in April from March and came in below expectations.
The world marketplace at present seems to be overlooking a U.S. military build-up in the Middle East. President Trump is sending 100,000 U.S. troops to the region, to complement the U.S. naval task force steaming to the Persian Gulf. This week’s attacks on two Saudi oil tankers in the Strait of Hormuz showed that tensions in the region are on the rise—namely a U.S.-Iran stare-down.
Meantime, the Euro zone reported its first-quarter GDP at up 0.4% from the fourth quarter of last year and up 1.2%, year-on-year. Those numbers were right in line with market expectations and help to confirm European Union economic growth remains tepid.
The key “outside markets” today see the U.S. dollar index slightly firmer. Meantime, Nymex crude oil prices are lower and trading around $61.00 a barrel.
It’s a very busy day for U.S. economic data releases, including the weekly MBA mortgage applications survey, retail sales, the Empire State manufacturing survey, industrial production and capacity utilization, manufacturing and trade inventories, the NAHB housing index, Treasury international capital data and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls have faded recently to suggest a market top is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,869.25 and then at 2,893.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,799.75 and then at 2,789.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are weaker in early U.S. trading. Bulls have faded recently to suggest a market top is 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 and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,457.00 and then at 7,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,350.00 and then at this week’s low of 7,290.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit a six-week high overnight. Prices are within easy striking distance of the contract high scored in March. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 150 even and then at the contract high of 150 21/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 149 6/32 and then at 149 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are higher and hit a six-week high overnight. Prices are close to the March contract high. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 124.10.0 and then at 124.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 124.23.0 and then at the contract high of 124.31.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
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 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.510 and then at 97.865. Shorter-term support is seen at 97.075 and then at this week’s low of 96.810. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are lower in early U.S. trading. Bulls have faded recently to suggest a market top is in place. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at $62.11 and then at $63.00. Look for sell stops just below technical support at this week’s low of $60.64 and then at the May low of $60.04. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were higher overnight on more short covering and bargain hunting. Grain market bulls are coming to life this week, to suggest market bottoms are in place. Weekly closes Friday that are at or near the weekly highs would be a better clue market bottoms are in place. It appears grain traders have factored into prices all the bearish U.S.-China trade news, and are now focused on wet weather in the Corn Belt (and more on the way) that has seriously slowed corn and soybean planting progress—to the point that yields will be impacted negatively.
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