Friday, April 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, on a rebound from selling pressure Thursday afternoon, on news President Biden will propose nearly doubling the capital gains tax rate on the rich to fund programs aimed at more economic equality for all Americans. For those earning $1 million or more, the new top rate, coupled with an existing surtax on investment income, means federal tax rates for wealthy investors could be as high as 43.4%. Republicans slammed the proposal. The U.S. stock indexes have wavered this week amid the conflict of a likely expanding U.S. economy in the months ahead, but with a pandemic that is still seriously impacting much of the world.
In overnight developments, the Eurozone April composite purchasing managers index (PMI) came in at 53.7 versus 53.2 in March, and was above market expectations. A reading above 50.0 suggest growth. The Euro zone manufacturing PMI was 63.3 in the same period.
In other news, Bitcoin has taken it on the chin this week, hitting a six-week low on Friday and trading below $50,000, after trading near $65,000 just a couple weeks ago. The phrase comes to mind, “easy come, easy go.” Also, the gold and silver markets have rallied at the same time Bitcoin has sold off.
Also, it’s difficult for stock, financial and currency market traders to ignore what is going on in the grain futures markets this week. Corn, soybean and wheat futures have rocketed to multi-year highs amid an expected surge in demand for grains from China and its booming economy. Surging grain prices are just one more in a string of clues (and it’s a strong one) that global inflation is on the rise and may become untamable down the road.
The key outside markets today see the U.S. dollar index lower amid a near-term price downtrend in place. Nymex crude oil prices are modestly higher and trading around $61.65 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.56%.
U.S. economic data due for release Friday includes the U.S. flash manufacturing and services purchasing managers indexes (PMI), and new residential sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the record high of 4,183.50 and then at 4,200.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,110.50 and then at 3,980.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are slightly higher in early U.S. trading. 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 Thursday’s high of 13,944.75 and then at the contract high of 14,059.50. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 13,701.75 and then at 13,600.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading today. Bears have the overall near-term technical advantage. However, recent sideways-to-higher price action at lower levels may be “basing” that puts in a market bottom. Prices are also in a fledgling uptrend on the daily chart. 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 neutral early today. Shorter-term technical resistance is seen at the April high of 159 1/32 and then at 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 158 even and then at 157 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer 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-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 132.24.5 and then at 132.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.13.5 and then at 132.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are solidly higher in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bullish today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2093 and then at 1.2150. Buy stops likely reside just above those levels. Shorter-term support is seen at 1.2000 and then at this week’s low of 1.1956. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
June Nymex crude oil prices are firmer in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $62.56 and then at $63.00. Look for sell stops just below technical support at this week’s low of $60.61 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures are lower in early U.S. pre-market trading, on corrective pullbacks from limit or near daily limit gains on Thursday that pushed corn, beans and wheat to multi-year highs. China demand rumors, cold weather in the U.S. midsection this week and a bullish global supply and demand balance is fueling the grain market bulls. More upside in the grains is likely in the coming months.
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