Thursday, March 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stocks were mixed overnight. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins.
The world marketplace is still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) meeting conclusion and Fed Chairman Powell’s press conference. Surprisingly, the Fed took another strong step in the direction of easier U.S. monetary policy. The FOMC statement said the Fed would keep U.S. interest rates unchanged and plans no more rate hikes this year. The statement also said the U.S. labor market remains strong but U.S. economic growth has slowed a bit, as evidenced by slower household spending and lower business investment.
U.S. stocks initially were supported on the dovish Fed stance, but then sold off on worries about slowing global economic growth. Gold prices are solidly higher today and hit a three-week high overnight, boosted on the dovish Fed news Wednesday afternoon. Palladium prices hit another record high overnight and are trading above $1,575.00 an ounce.
The world markets are again trying to figure out if the U.S. and China are close to a substantive trade deal. Early-week reports said the U.S. and China were moving closer to a formal trade agreement. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are traveling to China next week for high-level discussions. However, on Wednesday President Trump said U.S. tariffs on China won’t be lifted right away even if a trade deal is reached soon.
The key outside markets today see the U.S. dollar index higher an upside correction after solid losses and hitting a six-week low Wednesday. The greenback bulls have faded recently. Meantime, Nymex crude oil prices are modestly lower and trading just below $60.00 a barrel. Oil prices hit a four-month high overnight.
U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly down in early U.S. trading, on mild profit taking. Bulls still have the firm near-term technical advantage amid a price uptrend on the daily chart. 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 early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 2,849.25 and then at this week’s high of 2,858.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,817.25 and then at 2,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly up in early U.S. trading. Bulls have the firm overall near-term technical advantage amid a price uptrend, to suggest more gains in the near term. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 7,458.00 and then at 7,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 7,349.50 and then at this week’s low of 7,321.75. Sell stops are likely located 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 and hit a 10-week high in early U.S. trading today. 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 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 147 12/32 and then at the contract high of 147 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 146 28/32 and then at 146 16/32. 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 contract high 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 bullish early today. Shorter-term resistance lies at the overnight contract high of 123.20.0 and then at 123.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.12.0 and then at 123.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is solidly higher in early U.S. trading and has recovered most of Wednesday’s big losses. 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 and 18-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 95.830 and then at 96.000. Shorter-term support is at this week’s low of 95.170 and then at 95.000. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
May Nymex crude oil prices are lower in early U.S. trading, on a normal corrective pullback after hitting a four-month high overnight. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above 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 the overnight high of $60.33 and then at $61.00. Look for sell stops just below technical support at $59.00 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were again mixed overnight. Traders are looking forward to today’s USDA weekly export sales data, to see if China has ramped up purchases of U.S. ag products. Grain market bears have the overall near-term technical advantage. Flooding and wet fields in the Corn Belt have traders wondering about the acreage mix in the region.
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