Friday, June 9–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
The feature in the marketplace late this week is the stunning setback for the U.K. ruling Conservative party and Prime Minister Theresa May. Her “snap election” loss of party seats in government has created a “hung Parliament,” which puts May’s fast-track Brexit approach in serious jeopardy, and weakens May, herself. The British pound dropped sharply on the election news and the U.S. dollar index rallied. However, European stock markets were higher on the news.
Gold prices did not rally on the surprise U.K. election results, but instead was pressured by the late-week rally in the U.S. dollar.
Of the three major focuses the markets had this week (the other two being the European Central Bank meeting and the former FBI director Comey’s testimony to the U.S. Congress), the U.K. elections were the only “miss” from market expectations.
Focus is now turning to next week’s FOMC meeting on Tuesday and Wednesday, at which time the Federal Reserve is expected to slightly raise U.S. interest rates.
The other “outside market” on Friday morning sees Nymex crude oil futures prices slightly higher after Wednesday’s steep sell off that produced fresh near-term technical damage. The oil market bears have the firm overall near-term technical advantage as prices are well below $50.00 a barrel.
U.S. economic data due for release Friday is light and includes the monthly wholesale trade report.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly higher in early U.S. trading and near the recent contract and record high. The bulls have the strong near-term technical advantage. There are no early technical clues that a market top is close at hand. 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 the contract high of 2,437.00 and then at 2,450.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,421.75 and then at 2,408.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index September futures: Prices are slightly up in early U.S. trading. Prices Thursday hit another record and contract high overnight. Bulls have the strong overall near-term technical advantage and there are no early chart clues a market top is close at hand. 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 neutral to bearish early today. Shorter-term technical resistance is seen at the contract high of 5,905.75 and then at 5,925.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 5,877.25 and then at this week’s low of 5,853.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are slightly lower in early U.S. trading, on more profit taking after this week’s contract high. Bulls still have the firm 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 154 26/32 and then at 155 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 153 28/32 and then at 153 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are weaker in early U.S. trading, on more profit taking after hitting a contract high on Tuesday. Bulls still 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 126.22.0 and then at 126.25.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 126.07.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is solidly higher in early U.S. trading, on short covering after hitting a six-month low on Wednesday. Bears still 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. 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 the overnight high of 97.210 and then at 97.480. Shorter-term support is seen at the overnight low of 96.900 and then at 96.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly higher in early U.S. trading. The bears have the firm overall near-term technical advantage and gained more power Wednesday. Look for buy stops to reside just above technical resistance at $46.18 and then at $47.00. Look for sell stops just below technical support at this week’s low of $45.20 and then at $45.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were weaker overnight on some profit taking and a technical correction from this week’s solid gains. Focus this morning will be on the monthly USDA supply and demand report at 11:00 a.m. Chicago time. We are in the first significant weather market of the growing season. Corn futures have this week seen a big and bullish upside breakout from a trading range as weather in the U.S. Corn Belt will turn very hot and very dry for at least the next week. Soybeans and wheat have rallied, too. Next Monday’s trading and the updated weather forecasts for the Corn Belt will be critical for the markets.