Thursday, May 2–Jim Wyckoff’s Morning Markets Report
Asian stock markets were mixed to firmer overnight, while European stocks were mixed to weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. stocks are at or near record and/or multi-month highs scored this week.
Traders and investors are still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) statement and press conference from Fed Chairman Jerome Powell. While the Fed made no changes in U.S. monetary policy, the statement and Powell’s comments did move markets. The FOMC statement said some members were worried that inflation is too low, which the marketplace initially read as dovish on monetary policy. However, at Powell’s press conference, when asked about worrisome low inflation, he said elements causing present lower inflation are “transitory.” While there is no clear consensus at all on the timing or direction of the next Fed interest rate move, it seems most of the marketplace now feels there is less of a chance the Fed will cut U.S. interest rates anytime soon. That’s because Powell not only said very low inflation was transitory, he was also very upbeat on assessing the U.S. economy’s prospects.
The gold market sunk Wednesday afternoon following the Fed meeting, while the U.S. dollar index rallied off its lows to post modest gains. U.S. Treasury bond and note futures prices initially rallied on the FOMC statement but then lost all those gains after Powell’s remarks. U.S. stocks rallied modestly on the Fed news.
In overnight news, the Bank of England left its monetary policy unchanged at its regular meeting today.
Also, the Euro zone’s April manufacturing purchasing managers index (PMI) came in at 47.9, which was just above expectations but still a downbeat report. A reading below 50.0 suggests contraction in the sector.
Focus will quickly turn to Friday 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 Friday’s more important Labor Department jobs number will be higher.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are lower and trading just below $63.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the ISM New York report on business, the global manufacturing PMI, and manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are modestly higher in early U.S. trading today. Prices hit another 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 bullish early today. The 4-day moving average is above 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 the contract 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 the overnight low of 2,915.50 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 7,732.00 and then at 7,700.00. 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 neutral early today. The 4-day moving average is above the 9- and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 148 even and then at this week’s high of 148 12/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 147 8/32 and then at this week’s low of 146 24/32. 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 bullish early today. The 4-day moving average is above the 9-day and 19-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 123.21.0 and then at 123.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 123.10.0 and then at 123.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly lower early today. Bulls still 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 bearish early today. The dollar index finds shorter-term technical resistance at Wednesday’s high of 97.460 and then at 97.625. Shorter-term support is seen at 97.170 and then at 97.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage and are trying to keep a gentle uptrend in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at Wednesday’s high of $63.93 and then at this week’s high of $64.75. Look for sell stops just below technical support at last week’s low of $62.28 and then at $62.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures again were mixed overnight. Traders will closely examine this morning’s weekly USDA export sales report. 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 CNBC says 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