Friday, May 17–Jim Wyckoff’s morning markets report
In overnight news, the Euro zone April consumer price index was reported up 2.4%, year-on-year, which was right in line with market expectations.
China’s government has announced measures to bolster is listing property sector, including a 300 billion yuan relending facility for affordable housing. China property stocks rallied sharply on the news. China also got some upbeat economic news today, as its April industrial output was up 6.7%, year-on-year, which was better than market expectations.
Comex copper futures prices this week hit a record high above $5.00 a pound. There continues to be talk in the metals industry of a big “short squeeze” in Comex copper futures. The respected broker SP Angel said this morning in an email dispatch: “China’s CMOC, which owns the IXM trading group, filed a report to the Shanghai Stock Exchange Thursday stating its positions were ‘completely controllable’ and its trades were ‘100% hedged to reduce price risks.’ Reuters reported on Wednesday that IXM and Trafigura were sourcing physical copper to deliver into CME to cover short positions. The positions reflect expectations that current copper prices have moved ahead of current demand requirements, with China buying muted. Supply disruptions have limited concentrate availability, seeing smelters rush to secure available feedstock to keep their operations running, with some operating at a loss. Traders expect redirected shipments into the U.S. to take some pressure of current prices, although this could take up to two weeks. Trading volumes in base metals have seen huge spikes this week, with LME contracts hitting all-time highs in liquidity terms. Speculators are wagering on base metals alongside hopes of lower interest rate environments and improved PMI data. Russian sanctions have also fueled concerns over metal shortages. Copper hedge fund positioning is reaching the highest levels since January 2018. Shanghai speculators are also taking part, with futures trading volumes setting record highs in April.”
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are slightly up and trading around $79.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.38%.
U.S. economic data due for release Friday is light and includes leading economic indicators.
STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and not far below Thursday’s contract and record high. The shorter-term moving averages (4-day, 9-day 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 record high of 5,349.00 and then at 5,375.00. Support for active traders is seen at Wednesday’s low of 5,266.25 and then at this week’s low of 5,216.75. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are just a bit firmer in early U.S. trading after hitting a contract and record high Thursday. 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the record high of 18,760.75 and then at 18,900.00. On the downside, shorter-term support is seen at 18,500.00 and then at Wednesday’s low of 18,393.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are weaker 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. 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 the overnight high of 118 2/32 and then at this week’s high of 118 23/32. Shorter-term support lies at 117 even and then at 116 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are weaker 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. 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 109.18.5 and then at this week’s high of 109.31.5. Shorter-term technical support is seen at 109.00.0 and then at 108.24.0. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The June Euro currency futures are lower in early U.S. trading. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above 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 the overnight high of 1.0882 and then at this week’s high of 1.0909. Shorter-term support is seen at Wednesday’s low of 1.0828 and then at this week’s low of 1.0780. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
June Nymex crude oil prices are just a bit weaker in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $80.00 and then at $81.00. Look for sell stops just below technical support at $78.00 and then at this week’s low of $76.70. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were higher overnight. Corn, HRW and SRW wheat, soybeans and soybean meal are all trending higher on the daily bar charts. It appears the speculators are wanting to play the long sides of the grains, including the big “fund” traders.
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