Friday, June 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings and at or near three-month highs when the New York day session begins. Continued central bank stimulus programs keep pushing the growing heaps of cash into the stock markets. The latest influx comes from the European Central Bank, which announced Thursday another 600 billion Euro infusion into the Euro zone economy. Also, there is the perception among global traders and investors that the Covid-19 pandemic has peaked, at least from an economic impact perspective if not also from a human toll perspective. That’s allowing risk appetite to uptick in the markets.
The U.S. economic data point of the week is Friday morning’s Labor Department employment situation report for May, expected to show non-farm payrolls down 8.3 million. In the April jobs report, there was a 20.5 million drop in non-farm payrolls.
The important outside markets see the U.S. dollar index modestly higher early today on a corrective bounce after hitting an 11-week low overnight. One feature in the marketplace this week has been the slumping greenback and the resurgence of the so-called “commodity currencies” like the Canadian and Australian dollars. Part of the reason has been civil unrest in the U.S. However, it could also be that many of the big speculative “fund” traders are moving into commodities and commodity currencies, reckoning many commodity markets are now longer-term value-buying opportunities and that inflation will flare up in the coming months. Economics 101 classes teach that pumping large sums of money into financial systems creates price inflation.
Meantime, Nymex crude oil prices are higher and trading around $38.30 a barrel. The OPEC cartel and its allies have reached a deal to extend the crude oil production cuts by one month, through July. Since late April the price of Nymex crude has doubled.
The yield on the benchmark U.S. Treasury 10-year note is currently around 0.75%. Bond yields have risen significantly this week, suggesting less risk aversion in the market place, but maybe also some creeping concerns about rising inflation.
Other U.S. economic data due for release Friday includes the consumer credit report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a 13-week high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,135.25 and then at 3,150.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,096.00 and then at Thursday’s low of 3,077.00. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher in early U.S. trading, and near Thursday’s more-than-three-month high. A price uptrend is firmly in place on the daily chart. 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 early today. Shorter-term technical resistance is seen at this week’s high of 9,721.00 and then at the February high of 9,765.25. On the downside, shorter-term support is seen at Thursday’s low of 9,556.00 and then at this week’s low of 9,437.25. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly lower and hit a 2.5-month low in early U.S. trading. Bulls have lost their overall technical advantage. 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 bearish early today. Shorter-term technical resistance is seen at 174 even and then at the overnight high of 174 15/32. Shorter-term support lies at 172 16/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 3.5
September U.S. T-Notes: Prices are lower and hit a more-than-two-month low in early U.S. trading. Bulls are fading fast. 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 bearish early today. Shorter-term resistance lies at 137.24.0 and then at 138.00.0. Shorter-term technical support lies at 137.10.0 and then at 137.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer on a corrective bounce after hitting an 11-week low overnight. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at 97.000 and then at 97.500. Shorter-term support is seen at the overnight low of 96.460 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are higher and hit a 2.5-month high in early U.S. trading. A price uptrend is in place on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $39.00 and then at $40.00. Look for sell stops just below technical support at the overnight low of $37.05 and then at $36.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures are firmer in early U.S. pre-market trading, on short covering and some bargain hunting. Bulls need a weather market in the U.S. Midwest to develop, and some long-range forecasts are suggesting drier weather in the Corn Belt. It could also be that the big speculative funds are getting back into the grain markets on the long side, on ideas of rising inflation.
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