Monday, March 9–Jim Wyckoff’s Morning Markets Report
Global stock, commodity and financial markets were rocked overnight following the weekend news that Saudi Arabia said it would drastically lower its crude oil prices and pump more crude oil following a failed OPEC meeting in which Russia refused to lower its crude production. Nymex crude oil prices fell to a four-year low of $27.34 a barrel overnight before coming off those lows but still trading down nearly $9.00 a barrel at around $32.50. The one-day loss in crude oil prices is the biggest in almost 30 years, dating back to the 1991 first gulf war.
Global stock markets sold off sharply overnight and the U.S. stock index futures are pointed toward sharply lower to limit-down price moves when the New York day session opens.
The benchmark 10-year U.S. Treasury note saw its yield dive to a record low of 0.387% overnight, and its currently trading around 0.5%. The U.S. 30-year Treasury bond’s yield dropped below 1.0% overnight. U.S. Treasury bond futures overnight at one point saw prices trade over 13 points higher. For perspective, a one-point move in T-Bond prices (32/32) is normally consider a big move.
Gold prices soared above $1,700.00 an ounce and hit a seven-year high overnight before falling back to trade modestly down on the day, at around $1,666.00. Gold is likely being pressure by the old trading adage, “When you can’t sell what you want, you sell what you can,” as the e-mini S&P stock index futures were locked limit down overnight and the U.S. stock market has yet to open, as of this writing.
The U.S. dollar index is trading lower and hit a 13-month low overnight. The Japanese yen has soared on the foreign exchange market, while the Australian dollar plunged in value.
The Saudi-Russia oil-price war is the second shock to hit the global marketplace this year, as traders and investors are still dealing with the high anxiety of the coronavirus, or Covid-19 outbreak that continues to spread. Reports over the weekend said half of Italy is on lockdown, while more cases and deaths have been reported in the U.S. The state of New York has declared a state of emergency because of the outbreak. Business events in the U.S. are now being cancelled and some companies have banned employee travel on airlines.
More and more, it appears the global economy is spiraling into recession and a bear market in equities. Young investors have never experienced a bear market in stocks, which will especially unnerve them. Look for the major central banks to take more action—possibly as soon as Monday—to try to mitigate the collapsing stock markets and assuage very shaky consumer confidence.
U.S. economic data due for release Monday is light and includes the employment trends index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are limit down and hit an 11-month low in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at 2,850.00 and then at the overnight high of 2,907.25. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 2,800.00 and then at 2,750.00. Wyckoff’s Intra-day Market Rating: 1.0 (lowest ever for any intra-day market rating of any market)
June Nasdaq index futures: Prices are sharply down and hit a more-than-four-month low in early U.S. trading. Bears have the firm overall near-term technical advantage. 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 8,200.00 and then at 8,300.00. On the downside, short-term support is seen at 8,000.00 and then at 7,900.00. Wyckoff’s Intra-Day Market Rating: 1.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are sharply higher and soared to another contract high in early U.S. trading. Bulls have the strong 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 overnight contract high of 191 22/32 and then at 192 even. Shorter-term support lies at 186 even and then at 185 even. Wyckoff’s Intra-Day Market Rating: 10.0
June U.S. T-Notes: Prices are sharply higher and hit a contract high in early U.S. trading. Bulls have the strong 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 to bullish early today. Shorter-term resistance lies at the overnight contract high of 140.24.0 and then at 141.00.0. Shorter-term technical support lies at 139.00.0 and then at the overnight low of 138.15.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 9.0
U.S. DOLLAR INDEX
The June U.S. dollar index is sharply lower and hit a 13-month low in early U.S. trading. Bears have the firm near-term technical advantage. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.685 and then at 96.000. Shorter-term support is seen at the overnight low of 94.550 and then at 94.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
April Nymex crude oil prices are sharply lower and hit a four-year low in early U.S. trading. Bears are in strong near-term technical control. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 $35.00 and then at $36.00. Look for sell stops just below technical support at $30.00 and then at the overnight low of $27.34. Wyckoff’s Intra-Day Market Rating: 1.0
GRAINS
US grain futures are solidly lower in early US pre-market trading Thursday. Corn is 3 to 6 cents down, soybeans around 13 cents lower, and wheat around 8 cents lower. The global panic in stock and financial markets continues, and has accelerating Monday, to be very bearish for grains and keeping buyers on the sidelines. Grain traders will continue to look to the stock and financial markets for direction. Unfortunately, the coronavirus outbreak scare and the oil price war between Saudi Arabia and Russia are likely to keep the global marketplace roiled for at least the near term.
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