Friday, May 3–Jim Wyckoff’s Morning Markets Report
Asian stock markets were mixed to flat overnight, while European stocks were mostly firmer. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. “Sell in May and go away.” U.S. stock indexes have sold off the first two days in May. That old saying suggests selling stocks in May and not coming back to the buy side until late summer. Such a scenario would be a bullish element for competing classes like raw commodities.
Focus is on this morning’s April U.S. employment report from the Labor Department. That report is expected to show a non-farm payrolls rise of 190,000. However, Wednesday’s very strong ADP jobs gain (up 275,000 versus expectations of up 177,000) has many thinking today’s more important Labor Department jobs number will be higher.
In overnight news, the Eurozone’s April consumer price index was reported up 1.7%, year-on-year, from a reading of up 1.4% in March. Meantime, the March producer price index was up 2.9%, year-on-year, in the Euro zone. The European Central Bank has targeted a rate of around 2% for annual Euro zone inflation.
The World Gold Council is forecasting that world central banks will buy 500 to 600 tons of gold this year, compared to around 400 tons in recent years. However, in 2018 global central banks bought 652 tons. It’s interesting and somewhat ironic that supposedly smart world central bankers continue to buy gold as a store of value, while many supposedly smart financial advisors tell individual investors to shy away from an asset that produces no yield or dividend. It can be argued that owning gold is like having a weapon for personal protection: you don’t need it until you really need it.
The key “outside markets” today see the U.S. dollar index modestly higher. Meantime, Nymex crude oil prices are near steady and trading just below $62.00 a barrel.
Other U.S. economic data due for release Friday includes the advance economic indicators report, the U.S. services PMI, and the ISM non-manufacturing report on business.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are modestly higher in early U.S. trading today. Prices hit a seven-month high on Wednesday. Bulls have the solid near-term technical advantage amid a price uptrend on the daily chart and no early clues that a market top is close at hand. 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 early today. Today, shorter-term technical resistance comes in at this week’s high of 2,961.25 and then at 2,975.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,901.50 and then at 2,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are higher in early U.S. trading and not far below last week’s contract high. Bulls have the solid overall near-term technical advantage amid a price uptrend on the daily bar chart. 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 early today. Shorter-term technical resistance is seen at 7,800.00 and then at last week’s contract high of 7,879.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,734.75 and then at this week’s low of 7,682.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady 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- 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 147 5/32 and then at Thursday’s high of 147 29/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 146 24/32 and then at 146 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are lower in early U.S. trading. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 123.09.0 and then at 123.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 123.00.0 and then at 122.28.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The June U.S. dollar index is higher early today. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at 98.000 and then at the contract high of 98.085. Shorter-term support is seen at the overnight low of 97.540 and then at 97.255. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are slightly lower in early U.S. trading. Bulls are fading fast. A price uptrend on the daily bar chart was negated with Thursday’s sharp losses. 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 bearish early today. Look for buy stops to reside just above technical resistance at $62.50 and then at $63.00. Look for sell stops just below technical support at this week’s low of $60.95 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures again were mixed overnight. Grain market bears have the firm overall near-term technical advantage. Focus is on U.S. Corn Belt weather, which is a mixed bag now. It’s bullish for corn because of planting delays, which in turn is bearish for soybeans due to more bean acres likely planted. For wheat the wet weather is a mixed bag. Traders are closely monitoring progress on the U.S.-China trade talks, which reports say could wrap up with a deal late next week.
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