Wednesday, June 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up a bit in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Traders and investors are weighing the bullish aspects of generally faster rebounds in world economies than many had expected versus the bearish element of a resurgence in Covid-19 reported cases in some regions of the globe, including some U.S. states. At present, it appears the global economic growth factor is winning out. Skeptics can argue the rally in world stock markets is mainly due to the floods of central-bank infused cash that have hit the global financial system.
In overnight news, the Euro zone May consumer price index came out at -0.1% from April and up 0.1%, year-on-year. Deflationary concerns are still at the forefront for central bankers. However, a Wall Street Journal article at mid-week is headlined “Few Are Prepared for the Risk of Inflation Era After Recession.” The story says the 2008 financial crisis and the big influx of central bank liquidity into the financial systems then produced no problematic inflation. However, the article says things are different now and at present “the markets may have it completely wrong” on the inflation matter.
There are a couple of geopolitical developments that bear watching. North Korea has ramped up its provocation of South Korea in recent days. Also, a clash between Indian and Chinese soldiers in their border region is the first military conflict between the two nations in decades.
Fed Chairman Jerome Powell on Wednesday offers up his second and final day of testimony to the U.S. Congress on the health of the U.S. economy and its recovery prospects—today to a House of Representatives panel. His comments to a Senate committee on Tuesday produced no significant surprises.
The important outside markets early today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are lower and trading around $38.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.75% level.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are modestly higher in early U.S. trading. Bulls are recovering well from last week’s sell off. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below 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 bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,156.25 and then at 3,177.75. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,096.50 and then at Tuesday’s low of 3,060.25. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading as the bulls are recovering very well from late last week’s price pressure and are back near the recent record high. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the record high of 10,140.00 and then at 10,250.00. On the downside, shorter-term support is seen at the overnight low of 9,915.25 and then at 9,800.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 176 11/32 and then at Tuesday’s high of 176 29/32. Shorter-term support lies at this week’s low of 174 29/32 and then at 174 even. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are slightly up 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 138.21.5 and then at 139.03.0. Shorter-term technical support lies at this week’s low of 138.07.0 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 September U.S. dollar index is firmer in early U.S. trading. 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 last week’s high of 97.465 and then at 98.000. Shorter-term support is seen at the overnight low of 96.765 and then at this week’s low of 96.385. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are weaker in early U.S. trading. A price uptrend on the daily chart has stalled out. The shorter-term moving averages are neutral early today as the 4-day is below 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 this week’s high of $39.06 and then at $40.00. Look for sell stops just below technical support at the overnight low of $37.21 and then at Tuesday’s low of $36.38. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are weaker in early U.S. pre-market trading. Bulls have fizzled in the grains so far this week, amid worries about future demand from China. Weather in the U.S. Midwest is also overall bearish and crop conditions are generally good. Here’s an interesting tidbit: Monday, USDA lowered U.S. corn conditions to 71% good-to-excellent from 75% a week earlier, and this is significant because the last time corn ratings dropped by 4 points or more in a single week was in 2012, when the crops were severely damaged by a major drought. Prior to 2012, the last time corn ratings fell 4 points or more in June was in 2007, a year that featured average corn yields.
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