Monday, March 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were lower in overnight trading. U.S. stock index futures are presently pointed toward solidly lower openings when the New York electronic day session begins. The New York Stock Exchange, itself, is now closed. When the markets opened electronically Sunday, U.S. stock indexes were locked limit down. The U.S. Congress over the weekend failed to agree on a financial aid package for U.S. businesses and citizens, which is being blamed for the even more dour marketplace mood to start the trading week.
The Covid-19 outbreak continues to spread worldwide, with the U.S. economy shutting down even further as many states, including New York and California, have been locked down by their governors. Focus in the U.S. is on a shortage of medical supplies. Local health officials are now asking for the public to donate any supplies such as masks and gloves that they have at home. U.S. Senator Rand Paul has been diagnosed with Covid-19. Over the weekend much of the American public came to the stark realization the U.S. is not going to remain on lockdown for just a couple weeks, but instead for a period likely at least twice that long and probably even longer. China-U.S. relations are becoming more strained as President Trump now refers to Covid-19 as the “China virus,” which has angered the Chinese people.
Following is an edited email dispatch from a market analyst Monday morning: “U.S. economic growth estimates from the biggest investment banks are becoming increasingly dire. Last week, J.P. Morgan expected GDP to shrink 14% in the second quarter of this year, Goldman Sachs sees a 24% fall, while the latest forecast by Morgan Stanley is even gloomier, anticipating a 30% drop. However, the worst projections are coming from a well-respected Fed official, James Bullard, who said unemployment may hit 30% and GDP decline 50% in the second quarter. Within the next couple of weeks, we will get to know how severe the upcoming economic crisis will be. The scariest scenario is that it turns into a credit crisis which will break the financial system.”
The important outside markets today see Nymex crude oil prices weaker and trading around $22.25 a barrel. The U.S. dollar index is near steady after hitting a three-year high last week. Gold prices are higher and trading just below $1,500.00 an ounce. The 10-year U.S. Treasury note yield has dropped to 0.813% Monday after trading above 1.0% last week.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading and gapped to a contract low overnight. 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 2,260.00—the top of the overnight price gap on the daily chart–and then at 2,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight contract low of 2,174.00 and then at 2,150.00. Wyckoff’s Intra-day Market Rating: 3.0
June Nasdaq index futures: Prices are sharply lower in early U.S. trading and gapped to a contract low overnight. 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 the overnight high of 6,891.00 and then at 7,000.00. On the downside, short-term support is seen at the overnight contract low of 6,628.75 and then at 6,500.00. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are sharply higher in early U.S. trading. Bulls have upside momentum. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 high of 180 5/32 and then at 181 even. Shorter-term support lies at the overnight low of 177 16/32 and then at 177 even. Wyckoff’s Intra-Day Market Rating: 8.0
June U.S. T-Notes: Prices are solidly higher in early U.S. trading. Bulls have upside momentum. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 138.02.0 and then at 138.16.0. Shorter-term technical support lies at the overnight low of 137.06.5 and then at 137.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly up and hi another three-year high overnight. Bulls have the strong overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 103.960 and then at 104.250. Shorter-term support is seen at the overnight low of 102.720 and then at 102.500. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are near steady in early U.S. trading. Bears have the firm overall near-term technical advantage amid a price downtrend in place. 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 neutral early today. Look for buy stops to reside just above technical resistance at $24.00 and then at $25.00. Look for sell stops just below technical support at the March low of $20.52 and then at $20.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are steady to higher in early US pre-market trading, on more short covering and bargain hunting following recent selling pressure. The grain market bears appear to have become exhausted as the world still has to eat. Still, the global stock and financial markets need to stabilize before the grain markets start to see sustained rebounds—and such has not occurred yet after some slight hopes late last week.
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