Monday, May 4–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. On the front burner of the market place this week remains the Covid-19 pandemic and its destructive impact on the global economy. Purchasing managers’ surveys from around the world, released Friday and Monday, show unprecedented contraction in that important sector of economies during the month of April.
Said one market analyst in a morning email dispatch Monday: “The next two to three weeks are going to be extremely critical on two fronts: health and the economy. No one knows with a high degree of certainty how the Covid-19 curve will play out. While we all hope it slopes downward. There is no guarantee it will, especially with lockdown periods coming to an end. If cases begin to grow and the curve steepens, the chances are high of returning to another phase of complete shutdown. That would put economies on freeze again and the only direction for stocks to head then is down. The other risk factor is a new trade war between the U.S. and China, which is the last thing investors want to hear at this stage.”
The U.S. is ratcheting up its rhetoric blaming China for delaying reporting of the coronavirus outbreak in its early stages, and even implying the virus could have come from a Wuhan laboratory. This escalation in U.S.-China tensions could thwart the partial trade agreement the world’s two largest economies reached in January. President Trump has threatened new trade tariffs and other sanctions could be levied against China. Gold prices are rallying Monday, likely on concerns about future U.S.-China relations.
The European Central Bank on Monday forecast sharply lower economic growth and inflation for the bloc in 2020. The ECB sees Euro zone GDP down 5.5% and inflation at 0.4% in 2020. The ECB in January forecast inflation at 1.2% in 2020.
The important outside markets see Nymex crude oil prices lower lower and trading around $18.35 a barrel in June futures. The U.S. dollar index is higher today after the greenback bulls faded badly last week. The 10-year U.S. Treasury note yield is trading around 0.6% this morning.
U.S. economic reports out Monday include the ISM New York report on business, manufacturers’ shipments and inventories and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still have the near-term technical advantage amid a near-term uptrend on the daily chart. However, bulls are fading and the price uptrend is in jeopardy. 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,814.50 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,771.00 and then at 2,750.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. A price uptrend is still in place on the daily chart but it’s now in jeopardy. 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 bearish early today. Shorter-term technical resistance is seen at 8,700.00 and then at 8,800.00. On the downside, short-term support is seen at the overnight low of 8,556.25 and then at 8,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls still have the firm technical advantage amid recent sideways trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 182 even and then at last week’s high of 182 20/32. Shorter-term support lies at the overnight low of 181 2/32 and then at last week’s low of 180 3/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-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 last week’s high of 139.11.5 and then at 139.16.0. Shorter-term technical support lies at the overnight low of 139.00.0 and then at last week’s low of 138.17.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the overall near-term technical advantage but have faded recently. 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 the overnight high of 99.525 and then at 100.000. Shorter-term support is seen at the overnight low of 99.090 and then at last week’s low of 98.765. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are lower in early U.S. trading, on a corrective pullback from last week’s good gains. The bears have the overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $19.53 and then at $20.00. Look for sell stops just below technical support at $18.00 and then at $17.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are solidly lower in early US pre-market trading, on renewed worries about a U.S.-China trade war, amid rising tensions between the world’s two largest economies. The weaker global stocks markets to start the week are also going to weigh on the grain markets today. Grain bears remain in firm technical control. Expect more downside in the grain futures prices in the near term, amid global demand worries.
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