Wednesday, April 19–Jim Wyckoff’s morning markets report
Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Some hawkish Fed-speak Tuesday has dampened trader and investor spirits at mid-week. Non-voting members of the FOMC argued in favor of higher U.S. interest rates for longer. Fed Bank of Atlanta President Rapahel Bostic told CNBC he would like to see one more rate hike and then hold rates above 5% for a period of time to cool down inflation. Meantime, Fed Bank of St Louis President James Bullard told Reuters recession fears are overblown and that he supports U.S. rates to rise into a 5.5-5.75% range–up from the current 4.75-5.0%. The banking turmoil of a few weeks ago settled down due in part to notions the Federal Reserve may be less hawkish due to the banking worries and the risk of a U.S. recession. The hawkish rhetoric from Fed officials may once again raise the specter of more banking problems that may come with higher interest rates. Reads a Wall Street Journal headline: “Few lenders hedged against risk of Fed rate increases.”
In overnight news, Euro zone consumer price inflation in March rose 6.9%, year-on-year, which was right in line with market expectations.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are lower and trading around $79.50 a barrel. The benchmark 10-year U.S. Treasury note yield is presently fetching 3.616%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report and the Federal Reserve’s beige book.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading, on a corrective pullback after hitting a two-month high Tuesday. A price uptrend is still in place on the daily bar chart. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 4,198.25 and then at the February high of 4,244.00. Support for active traders is seen at the April low of 4,096.50 and then at 4,050.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. A price uptrend on the daily bar chart has stalled out. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 13,186.75 and then at the April high of 13,348.75. On the downside, shorter-term support is seen at the April low of 12,925.50 and then at 12,750.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower and hit a five-week low in early U.S. trading. 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 technical resistance is seen at the overnight high of 130 1/32 and then at this week’s high of 130 31/32. Shorter-term support lies at 129 even and then at 128 16/32. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower and hit a five-week low in early U.S. trading. 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 the overnight high of 114.14.5 and then at this week’s high of 114.31.0. Shorter-term technical support is seen at 114.00.0 and then at 113.26.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The June Euro currency futures are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1038 and then at last week’s high of 1.1114. Shorter-term support is seen at this week’s low of 1.0947 and then at 1.0900. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
May Nymex crude oil prices are lower and hit a more-than-two-week low in early U.S. trading. Bulls are fading. A four-week-old uptrend on the daily bar chart has been negated. The shorter-term moving averages are neutral early today as the 4-day is below the 9-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 $81.18 and then at this week’s high of $82.71. Look for sell stops just below technical support at $78.00 and then at $77.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were lower overnight. Keener risk aversion at mid-week has squelched the grain market bulls. Soybean and corn market bulls still have the firm chart advantage. SRW wheat bears have the firm overall near-term chart advantage and HRW bulls have the slight chart edge. Focus of grain traders is on weather in the U.S. Midwest, Plains and mid-South as corn and soybean planting gets under way. A serious cold snap in the upper and central U.S. later this week could produce some freeze damage to early planted crops and to wheat.
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