Tuesday, May 25–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Trader and investor attitudes are more upbeat this week as inflation worries have subsided, at least for now. Several commodity market prices have backed down from their multi-year highs and Federal Reserve officials in the recent comments appear to be tamping down notions of problematic price inflation. It could be that the marketplace is finally taking heed to the Federal Reserve’s official stance, for some time now, on inflation rising at an accelerating pace recently: it’s only transitory.
In overnight news, the Euro zone got some upbeat economic data when Germany reported its Ifo business index hit its highest reading in two years, at 99.2 versus 96.6 in April.
China’s renminbi currency has hit a three-year high against U.S. dollar on China’s strong economic rebound. The renminbi has gained more than 10% over the past year, driven by China’s solid economic rebound from the Covid-19 pandemic and foreign capital flows into the country.
The key outside markets today see the U.S. dollar index weaker and hitting a 4.5-month low. Meantime, Nymex crude oil prices are higher and are trading around $65.50 a barrel as the market has made a good rebound from last week’s selling pressure. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.593%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the S&P-Case-Shiller home price index, the Richmond Fed business survey, the consumer confidence index, and new residential sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are modestly firmer in early U.S. trading and back near the recent record high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below 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 4,212.75 and then at the contract high of 4,238.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,175.00 and then at Monday’s low of 4,142.50. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neural early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 13,738.25 and then at the May high of 13,947.50. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 13,600.00 and then at 13,500.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer and hit a two-week high in early U.S. trading today. Bears still have the overall near-term technical advantage but bulls have gained some momentum recently. 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 bullish early today. Shorter-term technical resistance is seen at 158 16/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 21/32 and then at this week’s low of 157 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer and hit a two-week high 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 132.24.5 and then at this week’s high of 132.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.19.0 and then at this week’s low of 132.15.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are higher and hit a three-month high in early U.S. trading. 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 early today. The Euro currency finds shorter-term technical resistance at the February high of 1.2271 and then at 1.2300. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.2216 and then at this week’s low of 1.2176. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
Nymex crude oil prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are not far below this year’s highs. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $66.34 and then at the May high of $67.02. Look for sell stops just below technical support at the overnight low of $65.41 and then at $65.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are mixed to weaker in early U.S. pre-market trading. Significant chart damage has been inflicted in the grain futures recently, to suggest that near-term market tops are in place. It’s going to very likely take a serious weather market scare in the Corn Belt this summer to revive the grain market bulls.
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