Monday, June 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly lower Monday, on corrective pullbacks from recent gains that have put many stock indexes at or near record or multi-year highs. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
Gold prices are modestly higher to start the trading week. There are some new geopolitical tensions in the Middle East that are prompting just a bit of risk aversion that is supporting the safe-haven metal. Saudi Arabia and a few other Middle East nations have cut ties with Qatar after accusing that small country of promoting terrorism.
Another terror attack that killed seven people in London over the weekend had little impact on the world markets. Unfortunately, these acts have become a fact of life in recent years and markets tend to quickly look past them.
In overnight news, the Euro zone composite purchasing managers index (PMI) came in at 56.8 in May, which was the same reading as April and was in line with market expectations.
Nymex crude oil futures prices are slightly lower in early U.S. trading. The oil market bears have the firm overall near-term technical advantage. The other “outside market” on Monday morning finds the U.S. dollar index firmer on a short-covering bounce after hitting a six-month low late last week. The greenback bears are also in firm near-term technical control as dollar index prices are in a three-month-old downtrend.
Traders and investors are starting to look over the horizon, as key marketplace developments in the coming days include general elections in the U.K. later this week and the FOMC meeting next week.
U.S. economic data due for release Monday includes revised productivity and costs, the U.S. services PMI, manufacturers’ shipments and inventories, the employment trends index, the ISM non-manufacturing survey, and the global services PMI.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly lower in early U.S. trading after hitting a contract and record high on Friday. 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 bearish 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 Friday’s low of 2,424.25 and then at 2,408.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index September futures: Prices are slightly lower in early U.S. trading on profit taking after hitting a record and contract high on Friday. 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 5,893.75 and then at 5,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,865.00 and then at 5,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are lower in early U.S. trading, on profit taking from recent gains that saw prices last week hit a contract high. 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 bearish early today. Shorter-term technical resistance is seen at 155 even and then at the contract high of 155 7/32. Buy stops likely reside just above those levels. Shorter-term support lies at 154 even and then at 153 16/32. 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 profit taking after hitting a contract high on Friday. 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 neutral to bearish early today. Shorter-term resistance lies at the overnight high of 126.22.5 and then at the contract high of 126.25.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the 126.10.0 and then at 126.04.0. 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 firmer in early U.S. trading, on short covering after hitting a six-month low on Friday. 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at 97.000 and then at 97.200. Shorter-term support is seen at last week’s low of 96.385 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are lower in early U.S. trading. The bears have the firm overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the overnight high of $48.42 and then at $49.00. Look for sell stops just below technical support at last week’s low of $46.74 and then at $46.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures markets were weaker overnight. Trading remains choppy in corn. Soybeans and wheat are firmly bearish. Weather in the U.S. Corn Belt remains mostly non-threatening at present, which is bearish. However, there is not much rain forecast for the region, which could become a bullish element as the week progresses. It’s going to take a weather scare in the U.S. Corn Belt to jumpstart any significant rallies in the grains in the coming weeks. The odds are good that a weather scare will develop in the next six weeks.