Friday, March 22–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian shares were mostly firmer overnight and European stocks were mostly lower. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Traders and investors worldwide are becoming more concerned about slowing global economic growth. The U.S. stock indexes hit five-month highs on Thursday and are seeing some normal profit-taking pressure today.
There was more downbeat economic data coming out of the European Union Friday. The Markit purchasing managers’ composite index (PMI) for the Euro zone came in at 51.3 in March from 51.9 in February. The February reading was lower than expected. The Eurozone manufacturing PMI in March was 47.6 versus 49.3 in February. Euro zone workhorse Germany saw its manufacturing PMI fall to 44.7 in March from 47.6 in February. A number above 50.0 suggests growth in the sector. A reading below 50.0 indicates contraction in the sector. The European Central Bank recently adopted an easier monetary policy to stimulate economic growth in the Euro zone.
In other overnight news, European Union leaders voted to allow the U.K. to postpone its Brexit that was set to occur next week. The U.K. Parliament is likely to vote on a new “soft” Brexit deal next week.
The key outside markets today see the U.S. dollar index higher on a strong rally after hitting a six-week low on Wednesday. The USDX initially sold off following the surprisingly dovish FOMC statement. Then, apparently, traders reckoned that even a slowing U.S. economy and stable U.S. interest rates still makes the U.S. dollar the most robust currency in the world. Meantime, Nymex crude oil prices are lower and trading around $59.50 a barrel. Oil prices hit a four-month high Thursday.
U.S. economic reports due for release Friday includes the flash services and manufacturing purchasing managers indexes, monthly wholesale trade, existing home sales, and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on mild profit taking after hitting a five-month high on Thursday. Bulls still have the firm near-term technical advantage amid a price 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,866.00 and then at 2,885.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,813.75 and then at 2,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are lower in early U.S. trading after hitting a five-month high overnight. Bulls have the firm overall near-term technical advantage amid a price uptrend. 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,544.75 and then at 7,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,450.00 and then at 7,400.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit another 10-week high in early U.S. trading today. Bulls have the solid overall near-term 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 147 31/32 and then at 148 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 147 2/32 and then at Thursday’s low of 146 28/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
June U.S. T-Notes: Prices are higher and hit another contract high 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight contract high of 123.24.0 and then at 123.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.10.5 and then at 123.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the firm overall near-term technical advantage and have regained power the past two sessions. The shorter-term moving averages for the dollar index 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 for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.290 and then at 96.500. Shorter-term support is at the overnight low of 95.695 and then at this week’s low of 95.170. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are lower in early U.S. trading, on a normal corrective pullback after hitting a four-month high on Thursday. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $60.00 and then at this week’s high of $60.39. Look for sell stops just below technical support at $59.00 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were mixed to firmer overnight. Grain market bears have the overall near-term technical advantage. However, it does look like they have put in market bottoms recently. Flooding and wet fields in the Corn Belt have traders wondering about the acreage mix in the region.
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