Thursday, May 23–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly down overnight. U.S. stock indexes are also pointed toward solidly lower openings when the New York day session begins. Risk aversion has again surfaced late this week. Parliamentary elections in the U.K. and The Netherlands get under way Thursday, with the populist parties (euroskeptics) possibly doing well. Other European countries’ election results will be announced Sunday. The U.K. Brexit issue that remains unresolved amid Prime Minister Theresa May’s planned departure continues to weight on the British pound.
Simmering closer to the front burner of the world marketplace today is the U.S.-China trade war that may or may not come to resolution in the next few weeks.
The U.S.’s more aggressive stance against Iran in recent weeks is another matter that could quickly elevate trader and investor tensions. A U.S. naval task force is in the Persian Gulf region.
Gold prices are getting a bit of a safe-haven bid Thursday from the keener uncertainty in the marketplace.
The key “outside markets” today see the U.S. dollar index higher and not far below this year’s high, which is a two-year high. Meantime, Nymex crude oil prices are lower and trading around $60.50 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash services and manufacturing purchasing managers’ indexes, new residential sales and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading. 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,858.50 and then at this week’s high of 2,876.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the May low of 2,799.75 and then at 2,780.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are down in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at 7,400.00 and then at the overnight high of 7,434.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the May low of 7,290.00 and then at 7,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher and hit a seven-week high in early U.S. trading, on safe-haven demand. Prices are within easy striking distance of the contract high scored in March. Bulls have the solid overall near-term technical advantage. 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 technical resistance is seen at the contract high of 150 21/32 and then at 151 even. Buy stops likely reside just above those levels. Shorter-term support lies at 150 even and then at the overnight low of 149 27/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
June U.S. T-Notes: Prices are higher in early U.S. trading and not far from the March contract high. Bulls have the solid overall near-term technical advantage. 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 neutral to bullish early today. Shorter-term support lies at the overnight low of 124.15.0 and then at 124.10.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the May high of 124.27.0 and then at the contract high of 124.31.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is higher and hit a two-year high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight contract high of 98.140 and then at 98.500. Shorter-term support is seen at the overnight low of 97.940 and then at this week’s low of 97.635. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
July Nymex crude oil prices are lower in early U.S. trading on good follow-through selling pressure from Wednesday’s sharp losses. Bears are now working on a price downtrend on the daily chart. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is even with 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 $61.41 and then at $62.00. Look for sell stops just below technical support at the May low of $60.10 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures prices were mixed to firmer in overnight trading. The corn and wheat futures markets are consolidating late this week, after hitting three-month highs earlier in the week. The soybean futures market is trying to recover from a Bloomberg report on Tuesday that said the Trump administration is considering, in light of the U.S.-China trade war that has hurt U.S. ag markets, an aid plan for U.S. farmers that includes a $2.00-per-bushel government payment for soybean growers. If realized, this plan would very likely mean U.S. farmers would plant as many soybean acres as they can, even if it’s very late in the planting season. USDA is reportedly set to provide more details on this matter Thursday. Weather in the U.S. Midwest remains bullish for the grains–limiting corn and soybean seeding progress, with corn and a record slow pace and soybeans not far behind. Lower production levels for corn and soybeans are now a real possibility this year due to the late planting. Wheat futures will continue in a follower’s role. If soybeans and corn continue to rally, wheat will, too. Traders will closely examine today’s weekly U.S. Agriculture Department export sales report. Purchases or cancellations from China will be a main focus of that 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