Friday, June 2–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly firmer overnight, following the lead of U.S. stock indexes that hit record highs Thursday. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Many world stock markets are also at or near record highs.
Gold prices are lower in pre-U.S. session trading, amid the “risk-on” appetite seen in the world marketplace so far Friday.
A feature in the marketplace so far today is solidly lower crude oil prices. Nymex crude oil futures prices hit a three-week low overnight, below $47.00 a barrel. The weekly DOE liquid energy stocks report released on Thursday was bearish, showing rising U.S. crude oil exports. A Wall Street Journal survey of oil analysts showed them lowering their oil price expectations in the near term and in the longer term. The oil market bears have gained downside momentum this week and have the firm overall near-term technical advantage.
Traders and investors are looking forward to Friday morning’s U.S. employment report for May from the Labor Department. The key non-farm payrolls number was forecast earlier this week to come in at up around 210,000. However, the ADP jobs report for May, released Thursday, showed a reading of up 253,000. A rise of around 180,000 jobs was expected for the ADP report. The stronger ADP number on Thursday now has many thinking Friday’s more important U.S. non-farm jobs number could be a miss to the upside, too. A strong U.S. jobs report Friday morning would firmly suggest the Federal Reserve will raise its key interest rate in a couple weeks.
In other overnight news, the Euro zone producer price index was reported unchanged in April from March and up 4.3%, year-on-year. The numbers were in line with market expectations.
The other “outside market” on Friday morning finds the U.S. dollar index near steady. The greenback bears are in near-term technical control as dollar index prices are in a nearly three-month-old downtrend.
Other U.S. economic data due for release Friday includes the international trade report and the ISM New York report on business.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly higher in early U.S. trading and hit a contract and record high overnight. The bulls have the strong near-term technical advantage. There are no early technical clues that a market top is close at hand. 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 bullish early today. Today, shorter-term technical resistance comes in at 2,440.00 and then at 2,450.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,426.50 and then at Thursday’s low of 2,408.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index September futures: Prices are firmer in early U.S. trading and hit another record and contract high overnight. Bulls have the strong overall near-term technical advantage and there are no early chart clues a market top is close at hand. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 5,875.00 and then at 5,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 5,827.75 and then at 5,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are firmer in early U.S. trading. Bulls have the firm 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 153 28/32 and then at the contract high of 154 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 15/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bulls have the firm 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 126.10.0 and then at the contract high of 126.13.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.04.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly higher in early U.S. trading. Bears still have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today as the 4-day is above the 9-day. The 9-day is below 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 97.200 and then at this week’s high of 97.480. Shorter-term support is seen at 96.660 and then at the May low of 96.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are solidly lower and hit a three-week low in early U.S. trading. The bears have the firm overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the overnight high of $48.19 and then at $49.00. Look for sell stops just below technical support at the overnight low of $46.74 and then at $46.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were steady to firmer overnight on more short covering. Trading remains choppy in corn. Soybeans and wheat are firmly bearish. Weather in the U.S. Corn Belt remains mostly non-threatening at present, which is bearish. But weather in the Corn Belt this time of year can “change on a dime.” It’s going to take a weather scare in the U.S. Corn Belt to jumpstart any significant rallies in the grains in the coming weeks. The odds are good that a weather scare will develop in the next six weeks.