Wednesday, June 10–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The Nasdaq index overnight hit another record high, while the S&P 500 stock index on Monday hit a three-month high. Risk appetite remains generally upbeat at mid-week as businesses in major economies continue to open back up after the Covid-19 lockdown and social distancing guidelines are relaxed.
Today concludes the two-day meeting of the Federal Reserve’s Open Market Committee (FOMC) that will see an afternoon statement, along with a press conference from Fed Chairman Jay Powell. No change in interest rates is expected. However, the Fed’s economic projections and Powell’s remarks will be closely scrutinized and will probably move markets to some degree.
In overnight news, the OECD think tank forecast global economic growth will fall 6% this year, if a second wave of Covid-19 can be avoided. The OECD also said the world economy “is on a tightrope” and a second wave of the pandemic would be a terrible blow to the world economy.
China got some dour economic news at mid-week as it reported its industrial prices in May fell by 3.7%, year-on-year. Consumer inflation fell to a 2.4% growth rate. Both figures undershot market expectations.
The important outside markets see the U.S. dollar index slightly lower and hitting a three-month low overnight. The greenback is in a serious swoon. Meantime, Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high above $40.00 Monday, and is trading around $38.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.79% level.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls still 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 bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,220.50 and then at 3,250.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,173.00 and then at 3,150.00. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are higher and hit another record high overnight. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight record high of 10,000.50 and then at 10,100.00. On the downside, shorter-term support is seen at 9,900.00 and then at Tuesday’s low of 9,796.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly up in early U.S. trading, as bulls are having a good week after recent strong losses. Shorter-term moving averages (4- 9- 18-day) are still 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 175 12/32 and then at 176 even. Shorter-term support lies at the overnight low of 174 7/32 and then at 174 even. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading and bulls are having a very good week. Shorter-term moving averages (4- 9- 18-day) are still 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 bullish early today. Shorter-term resistance lies at the overnight high of 138.01.0 and then at 138.08.0. Shorter-term technical support lies at the overnight low of 137.22.0 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker and hit a three-month low in overnight trading. Bulls are in big trouble. 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.425 and then at this week’s high of 97.035. Shorter-term support is seen at the overnight low of 95.995 and then at 95.750. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high on Monday. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $38.61 and then at $40.00. Look for sell stops just below technical support at this week’s low of $37.07 and then at $36.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed to firmer in early U.S. pre-market trading. Bulls are fading this week, especially in corn. Weather in the U.S. Midwest is bearish and crop conditions are good, to limit buying interest at present. Bulls need a weather market in the U.S. Midwest to develop. More years than not, one does develop in the summer, to some degree. Prices will grind mostly sideways until then.
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