Wednesday, May 24–Jim Wyckoff’s morning markets report
Asian and European stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. A report Tuesday afternoon said President Biden and House Speaker McCarthy have not made much progress on the U.S. debt-ceiling extension discussions. Another report said government spending is the main divisive issue between Republicans and Democrats. U.S. Treasury Secretary Janet Yellen this week reiterated the U.S. government could run out of money by June 1 if no new debt-extension deal is reached.
In a rare development, traders and investors are shunning shorter-term U.S. Treasury bills (less than one-year maturities) over fears of a U.S. government default on that debt. This has caused high-grade U.S. corporate bonds to trade at a yield discount to U.S. Treasury bills. U.S. Treasury debt up to now had been considered the safest investment in the world.
Meantime, one report said Covid-19 is flaring up again in China and infections will get worse before they get better. The report said up to 65 million new cases a day could occur in China this summer. China government officials months ago stopped giving the public information on the Covid situation.
The key outside markets today see the U.S. dollar index higher and hitting another two-month high overnight. Nymex crude oil prices are higher and trading around $74.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.684%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the FOMC minutes and the weekly DOE liquid energy stocks report.
–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 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 4,166.25 and then at 4,200.00. Support for active traders is seen at 4,120.00 and then at 4,100.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are slightly lower early U.S. trading on a corrective pullback after hitting an 8.5-month high Tuesday. Bulls have the solid near-term technical advantage. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at this week’s high of 13,979.25 and then at 14,100.00. On the downside, shorter-term support is seen at 13,628.25 and then at 13,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher on short covering after hitting a nine-week low Tuesday. 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 neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 127 24/32 and then at 128 6/32. Shorter-term support lies at the overnight low of 126 18/32 and then at this week’s low of 126 6/32. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer in early U.S. trading, on short covering after hitting a nine-week low Tuesday. Shorter-term moving averages (4- 9- 18-day) are 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 neutral to bullish early today. Shorter-term resistance lies at the this week’s high of 113.30.0 and then at 114.05.0. Shorter-term technical support is seen at the overnight low of 113.13.0 and then at this week’s low of 113.04.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are weaker and hit a two-month low in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.0848 and then at 1.0900. Shorter-term support is seen at 1.0750 and then at 1.0700. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
July Nymex crude oil prices are higher and hit a three-week high in early U.S. trading. 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 bullish early today. Look for buy stops to reside just above technical resistance at $75.00 and then at $76.00. Look for sell stops just below technical support at Tuesday’s low of $71.71 and then at this week’s low of $70.67. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were lower overnight. Risk aversion in the marketplace over the U.S. debt-extension impasse and worries about rising Covid cases in China are bearish for the grains at mid-week. The near-term technical postures for soybeans, meal, bean oil, SRW wheat and corn futures are all still bearish. HRW wheat is now also bearish.
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