Thursday, May 26–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The U.S. stock indexes have been wobbly this week, amid geopolitical and inflation concerns.
Reports overnight said Chinese Premier Li Keqiang gave a dour warning about the world’s second-largest economy as it struggles from Covid-19 outbreaks and lockdowns. The premier said the situation is worse than 2020 when the pandemic first emerged. He urged more efforts to reduce a soaring unemployment rate. China’s supply-chain bottlenecks and the Russia-Ukraine war have driven up the prices of goods and services worldwide.
Broker SP Angel reports in an email dispatch today that inflation is causing consumers to slow their consumption of non-essential items so they can pay for fuel, energy and food. “Consumers are also increasingly wary of the risk of unemployment and are rebuilding cash and paying down debt. Companies are also postponing or even cancelling capital expansion plans as increasing input prices and variable logistics create uncertainty as the era of cheap money is coming to an end. …Netflix seems to be an early indicator of cancelled subscriptions in response to financial stress and a dramatic fall in consumer sentiment.”
The key outside markets today see Nymex crude oil futures prices higher and trading around $111.25 a barrel. Meantime, the U.S. dollar index is weaker in early trading. The yield on the 10-year U.S. Treasury note is fetching 2.724%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the second estimate of first-quarter gross domestic product, pending home sales and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid near-term technical advantage. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 4,000.00 and then at 4,050.00. Support for active traders is seen at this week’s low of 3,872.00 and then at the May low of 3,807.50. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are slightly lower in early U.S. trading. Prices are in a two-month-old downtrend on the daily bar chart and bears have the solid technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen this week’s high of 12,075.50 and then at 12,250.00. On the downside, shorter-term support is seen at Thursday’s low of 11,672.00 and then at the May low of 11,491.25. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading. Bears are still in overall near-term technical control but the bulls have some momentum as a price downtrend has been negated and a fledgling price uptrend is in place. 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 neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 142 22/32 and then at 143 even. Shorter-term support lies at the overnight low of 141 10/32 and then at 141 even. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher and hit a six-week high in early U.S. trading. Bears are still in overall near-term technical control but the bulls have momentum as a price downtrend has been negated and a fledgling price uptrend is in place. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at 121.00.0 and then at 121.10.0. Shorter-term technical support lies at the overnight low of 120.12.0 and then at 120.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are firmer in early U.S. trading. Bears have the overall near-term technical advantage but the bulls have some momentum to suggest a market bottom is in place. The shorter-term moving averages for the Euro 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 for the Euro are bullish today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.0757 and then at 1.0800. Shorter-term support is seen at 1.0650 and then at 1.0600. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $111.96 and then at the May high of $113.20. Look for sell stops just below technical support at this week’s low of $108.61 and then at $107.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were mixed to lower in early U.S. pre-market trading. Grain market bulls have the overall near-term chart advantage but are fading amid the keener risk aversion in the marketplace that has sparked heightened U.S. recession fears. More bearish weather patterns in the U.S. Midwest are also keeping the bulls squelched. On tap today is the weekly USDA export sales report.
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