Tuesday, March 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is a bit keener Tuesday as Covid-19 infections and business lockdowns are on the rise in Europe again, amid vaccination rollout problems there. Also, tensions among world military and economic powers are up-ticking, as the U.S. and European Union are discussing further sanctioning China over human rights abuses, while at the same time Russia and Chinese government officials meet in a show of unity against the West.
The highlight of the trading day starts at midday, when U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell begin two days of congressional hearings over President Biden’s $1.9 trillion stimulus package and his planned $3 trillion infrastructure program. While Republicans say the plan piles up debt and risks stoking inflation with a recovery already underway, Yellen is expected to say even more government spending is needed, partly funded by higher U.S. taxes.
The key “outside markets” today see Nymex crude oil futures prices sharply lower and trading around $59.35 a barrel this morning. The Covid-related lockdowns in Europe have spooked oil traders who fear another big wave of Covid infections could dent oil demand again. Meantime, the U.S. dollar index is solidly higher early today. The U.S. Treasury 10-year note yield is fetching 1.63% Tuesday morning.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the Richmond Fed business survey, and new residential sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,944.50 and then at the contract high of 3,978.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at last week’s low of 3,875.00 and then at 3,850.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are weaker in early U.S. trading. 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 this week’s high of 13,157.00 and then at last week’s high of 13,287.25. On the downside, shorter-term support is seen at 12,900.00 and then at this week’s low of 12,788.50. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher on more short covering after hitting a contract low last week. Bears still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 156 16/32 and then at 157 even. Shorter-term support lies at the overnight low of 154 28/32 and then at this week’s low of 154 10/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading on more short covering after hitting a contract low last week. 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 bullish early today. Shorter-term resistance lies at 132.00.0 and then at last week’s high of 132.09.0. Shorter-term technical support lies at 131.20.0 and then at the overnight low of 131.14.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are solidly lower in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1969 and then at 1.2014. Shorter-term support is seen at this week’s low of 1.1892 and then at the March low of 1.1861. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
May Nymex crude oil prices are sharply lower in early U.S. trading. Bulls have the overall near-term technical advantage but a price uptrend on the daily chart has been negated, to suggest a near-term market top is in place. 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 $60.00 and then at $61.00. Look for sell stops just below technical support at the March low of $58.28 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 3.5
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. Bearish “outside markets” that see a higher U.S. dollar index and sharply lower oil prices are keeping grain buyers scarce today. Grain traders await the very important March 31 USDA planting intentions and quarterly grains stocks reports. Trading is likely to remain quieter ahead of that data. Grain market bulls do still have the overall near-term technical advantage. Grain traders need to keep an eye on crude oil prices. If oil prices take out on the downside the March low, such would be one clue that many of the raw commodity sector markets that had been in rally modes, may have topped out, at least for the near term, including the grains.
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