Tuesday, June 1–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite remains keener to start the month of June, amid notions the Federal Reserve may have been right in its proclamations that rising inflation will only be transitory.
Bloomberg reported hedge-fund managers have reduced their holdings in 20 out of 23 commodities, due in part to recent milder and wetter weather in the U.S. that is raising the prospects for larger harvests of grains. China’s government’s recent remarks on futures markets speculation, along with new regulations limiting the sale of futures to individual investors, have also taken some of the bullish fervor out of the raw commodity sector.
In other overnight news, China’s official manufacturing purchasing managers index (PMI) was reported at 51.0 in May from 51.1 in April. A reading above 50.0 suggests growth in the sector. Reports out of China say domestic manufacturers have stopped accepting new orders for products, or are evening considering shutting down, due to rising material costs.
The Euro zone consumer price index for May came in at up 2.0%, year-on-year, versus the rise of 1.6% seen in April. The May CPI was just above trader expectations.
Gold prices hit a five-month high overnight as traders seek out the metal has a hedge against rising inflationary pressures. Reports said gold exchange traded funds (ETF’s) has seen more money flow into them the past few weeks.
The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are solidly higher and hit a 2.5-year high, trading around $68.00 a barrel. An OPEC meeting Tuesday is in focus for oil traders. The cartel is expected to slightly increase its collective production. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.62%.
U.S. economic data due for release Tuesday includes the U.S. manufacturing PMI, the ISM report on business manufacturing, the IDB/TIPP economic optimism index, construction spending, the global manufacturing PMI, and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher in early U.S. trading and not far from the recent record high. Bulls have the solid overall near-term technical advantage. 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 the contract high of 4,228.25 and then at 4,250.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,181.25 and then at 4,150.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are firmer in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at last week’s high of 13,752.00 and then at 13,804.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,642.50 and then at 13,500.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading today. Bears have the 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 156 13/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 25/32 and then at 155 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at the overnight high of 131.28.0 and then at 132.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 131.18.0 and then at 131.14.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are higher in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2265 and then at the May high of 1.2292. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.2209 and then at last week’s low of 1.2157. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Nymex crude oil prices are higher and hit a 2.5-year high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $68.42 and then at $69.00. Look for sell stops just below technical support at $67.00 and then at the overnight low of $66.41. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. Grain market bulls have made a good recovery from recent selling pressure, to suggest last week that the markets put in near-term bottoms. My bias is that it’s still going to take a serious weather market scare in the Corn Belt this summer to completely revive the grain market bulls.
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