Tuesday, March 31–Jim Wyckoff’s Morning Markets Report
On this technically important last trading day of the month and of the quarter, global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Traders and investors are a bit more upbeat early this week following news Monday morning that a vaccine for Covid-19 is on a fast track and could be ready for the public by early 2021. Still, most global stock indexes will experience their worst quarter since 2008.
In overnight news, China got some positive economic data Tuesday, as the manufacturing purchasing managers index (PMI) for March was 52.0 from 35.7 in February, while the services PMI was 52.3 in March versus 29.6 in February. A reading above 50.0 suggests growth in the sector. This news was uplifting to those economies hit hard by the coronavirus, as China’s economy has been able to stage a very swift recovery.
The important outside markets today see Nymex crude oil prices higher and trading around $21.25 a barrel after hitting an 18-year low of $19.27 a barrel Monday. There are anecdotal reports that U.S. crude oil trading on some local cash markets is selling for as little as $5.00 a barrel due to a supply glut and no place to store oil in the U.S. The U.S. dollar index is rebounding early this week after last week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.68% Tuesday morning—up a bit from Monday. Gold prices are sharply lower so far this week, amid the uptick in trader/investor risk appetite and the stronger U.S. dollar.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the S&P Case-Shiller home price index, the consumer confidence index, and the ISM-Chicago business survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bears have the overall near-term technical advantage but bulls have some momentum on their side early this week. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at last week’s high of 2,634.50 and then at 2,650.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,595.00 and then at 2,550.00. Wyckoff’s Intra-day Market Rating: 5.0
June Nasdaq index futures: Prices are firmer and hit a three-week high in early U.S. trading. Bears still have the overall near-term technical advantage but bulls have momentum. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,957.00 and then at 8,000.00. On the downside, short-term support is seen at the overnight low of 7,812.00 and then at 7,700.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading, on a normal corrective pullback from recent gains. Bulls still have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 180 12/32 and then at 181 even. Shorter-term support lies at the overnight low of 178 29/32 and then at 178 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are weaker in early U.S. trading. Bulls have the firm 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 resistance lies at the overnight high of 138.27.5 and then at 139.00.0. Shorter-term technical support lies at the overnight low of 138.11.0 and then at 138.00.0. 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 solidly higher in early U.S. trading, on a corrective bounce from last week’s strong losses. Bulls and bears are on a level overall near-term technical playing field. 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 100.000 and then at 100.500. Shorter-term support is seen at the overnight low of 99.170 and then at 99.000. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
May Nymex crude oil prices are higher on a corrective bounce after hitting an 18-year low on Monday. Bears still have the solid overall near-term technical advantage amid a price downtrend in place. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at $22.00 and then at $23.00. Look for sell stops just below technical support at the overnight low of $20.23 and then at Monday’s low of $19.27. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are narrowly mixed in early US pre-market trading. While the grain futures markets have stabilized, the very uncertain global economic picture will keep rallies modest, including wheat, after its recent run higher. Traders will very closely examine today’s important USDA data releases: the U.S. planting intentions and quarterly grain stocks reports due out just before midday.
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