Wednesday, March 20–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stocks were mostly higher overnight. Risk appetite in the world marketplace remains upbeat, as there are no major geopolitical matters moving the world markets. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
Trader and investor focus is on the FOMC meeting of the Federal Reserve, which began Tuesday morning and ends Wednesday afternoon with a statement. The FOMC is not expected to change its monetary policy at this meeting. The Fed has become more dovish the past few months. As usual, the marketplace will glean the FOMC statement and Fed Chairman Jerome Powell’s wording for clues on the future path and timing of monetary policy changes.
News reports are saying the U.S. and China are moving closer to a formal trade agreement after the two largest economies in the world fought a trade war for months. Reports said U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are traveling to China next week for high-level discussions to try to get a deal wrapped up. Some are now speculating that a deal will be reached, but it won’t include important demands the U.S. had made, such as theft of intellectual property.
The key outside markets today see the U.S. dollar index slightly firmer on an upside correction after hitting a three-week low Tuesday. The greenback bulls have faded recently. Meantime, Nymex crude oil prices are modestly lower and trading just below $59.50 a barrel. Oil prices hit a four-month high Tuesday.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement and Powell press conference.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bulls 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 to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,858.75 and then at 2,875.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,824.00 and then at 2,812.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are near steady in early U.S. trading. Bulls have the firm overall near-term technical advantage 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 early today. Shorter-term technical resistance is seen at this week’s high of 7,421.25 and then at 7,450.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,321.75 and then at 7,300.00. 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 in early U.S. trading today. Bulls 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 neutral to bullish early today. Shorter-term technical resistance is seen at the recent highs of 146 17/32 and then at 147 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 145 23/32 and then at this week’s low of 145 12/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher 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 to bullish early today. Shorter-term resistance lies at 123.00.0 and then at last week’s high of 123.03.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 122.20.0 and then at 122.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is firmer in early U.S. trading. Bulls have the overall near-term technical advantage but have faded recently. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral 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 95.730 and then at 95.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are lower in early U.S. trading, on a normal corrective pullback after hitting a four-month high on Tuesday. 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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $59.57 and then at $60.00. Look for sell stops just below technical support at $58.00 and then at $57.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures were again mixed overnight. Not much new this week. Grain market bears have the overall near-term technical advantage amid overall worldwide slack demand for U.S. ag products. 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