Thursday, May 7–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors are more upbeat this week amid a strong recovery in Nymex crude oil futures prices and as U.S. and European economies begin to reopen. Still, the Covid-19 cases and deaths in the U.S. continue to rise outside of the earlier hotspots like New York City.
Focus today is on the weekly U.S. jobless claims report, which is expected to show less claims filed than the enormous figures seen in recent weeks, but still very large at over 3 million in new claims expected. Thursday’s weekly jobless report comes just ahead of Friday morning’s monthly employment situation report from the U.S. Labor Department, which is expected to show a loss of over 20 million jobs in April and an unemployment rate north of 15%, after a jobless rate of just 4.4% reported in March.
Another positive for traders and investors today is reports that U.S. and China trade officials will meet next week. The meeting comes after the recent rise in tensions between the world’s two largest economies, as the U.S. has accused China of hiding the Covid-19 outbreak, and even creating it in a laboratory.
China also got some upbeat economic data Thursday, as its exports unexpectedly rose in April by 3.5%, year-on-year, after declining 6.6% in March. Exports in April were forecast at down over 18%. Meantime, China’s imports fell 14.2% in April after declining only 0.9% in March.
The Bank of England today left its monetary policy unchanged, as most had expected. However, the BOE said U.K. economic growth for much of 2020 could be down 30%.
At least one market advisory firm is now calling for a “commodity super-cycle” to begin to occur in the coming months. The firm believes the combination of major global economies coming back to life in rapid fashion, after the Covid-19-induced demand shock, and the recent huge monetary stimulus measures from the big central banks of the world will produce huge demand for raw commodities that will drive their prices sharply higher. The naysayers to this postulation say the 2008 financial crisis that saw similar—although not nearly as extreme—conditions did not produce problematic price inflation at all, and in fact the world’s major economies struggled with inflation that was too low for many years. This longtime market watcher’s perspective on the matter: I lean on the side of problematic price inflation, thinking of the old saying, “no good deed (central bank stimulus) goes unpunished.”
The important outside markets Thursday see Nymex crude oil prices higher and trading around $26.00 a barrel in June futures. Prices have more than tripled from the recent low. The U.S. dollar index is slightly higher today as the greenback bulls are having a very good week.
Other U.S. economic reports out Thursday include the Challenger job-cuts report, preliminary productivity and costs, consumer credit and monthly chain store sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher again in early U.S. trading. Bulls have the near-term technical advantage amid a near-term 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. 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 2,900.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,823.00 and then at 2,800.00. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are higher in early U.S. trading. A price uptrend is in place on the daily chart. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 9,100.50 and then at the April high of 9,144.75. On the downside, short-term support is seen at 9,000.00 and then at the overnight low of 8,930.25. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly higher in early U.S. trading. Bulls still have the overall technical advantage but are fading badly this week and need to show fresh power soon. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 179 20/32 and then at 180 even. Shorter-term support lies at this week’s low of 178 1/32 and then at 177 16/32. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bulls are fading this week but still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 138.24.5 and then at 139.00.0. Shorter-term technical support lies at this week’s low of 138.08.5 and then at 138.00.0. 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 modestly higher in early U.S. trading. Bulls have the overall near-term technical advantage and are having a very good week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.335 and then at 100.500. Shorter-term support is seen at the overnight low of 100.000 and then at 99.800. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
June Nymex crude oil prices are higher and hit a three-week high in early U.S. trading. It strongly appears a market bottom is in place. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $28.00 and then at $29.00. Look for sell stops just below technical support at $25.00 and then at $24.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
US grain futures are higher in early US pre-market trading, on short covering from recent losses and amid better trader and investor risk appetite late this week. Grain bears remain in overall technical control. However, raw commodity sector leader crude oil’s big recovery in prices recently suggests the sector, including grains, may have already bottomed out.
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