Tuesday, June 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on normal corrective pullbacks from recent strong gains. The Nasdaq index overnight hit a record high, while the S&P 500 stock index hit a three-month high Monday. Trader and investor risk sentiment remains upbeat. The just-released NFIB small business optimism index rose to 94.4 in May from 90.9 in April. The U.S. government reported the American economy officially entered recession in February, while also on Monday the Federal Reserve expanded its lending program to U.S. businesses.
In overnight news, the Euro zone economy in the first quarter contracted by 3.6% from the fourth quarter of last year. Forecasters expect the second-quarter GDP reading to be worse.
The World Bank has forecast global GDP to see a 5.2% contraction this year. Advanced economies will contract 7%, led by a 9.1% decline in the Euro zone. Other GDP projections see the U.S. at -6.1%, China at up 1.0% and India -3.2%. “This is the first recession since 1870 triggered solely by a pandemic, and it continues to manifest itself… Given this uncertainty, further downgrades to the outlook are very likely,” the World Bank said. Global economic growth is due for a rebound in 2021, growing 4.2%, said the World Bank.
Today begins the two-day meeting of the Federal Reserve’s Open Market Committee (FOMC) that ends Wednesday afternoon with a statement and press conference from Fed Chairman Jay Powell.
The important outside markets see the U.S. dollar index slightly higher early today on a corrective bounce from its recent 11-week low. Meantime, Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high Monday, and trading around $37.25 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.82% level.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, the IBD/TIPP economic optimism index, and monthly wholesale trade.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are lower in early U.S. trading. Bulls still 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at Monday’s high of 3,220.50 and then at 3,250.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,150.00 and then at 3,125.00. Wyckoff’s Intra-day Market Rating: 4.0
September Nasdaq index futures: Prices are lower but did hit another record high overnight. A price uptrend is firmly in place on the daily chart. 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 9,889.74 and then at 9,950.00. On the downside, shorter-term support is seen at 9,750.00 and then at 9,700.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly up in early U.S. trading, on a corrective bounce from recent strong losses. Bears have the slight overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 174 19/32 and then at 175 even. Shorter-term support lies at the overnight low of 173 even and then at Monday’s low of 171 23/32. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading, on a corrective rebound. 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 resistance lies at the overnight high of 137.27.5 and then at 138.00.0. Shorter-term technical support lies at the overnight low of 137.10.5 and then at Monday’s low of 136.30.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer on a corrective bounce after hitting an 11-week low last Friday. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.005 and then at 97.250. Shorter-term support is seen at the overnight low of 96.460 and then at 96.250. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high on Monday. A price uptrend is in place on the daily bar chart. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $38.86 and then at $40.00. Look for sell stops just below technical support at $37.00 and then at $36.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are lower in early U.S. pre-market trading. Weather in the U.S. Midwest is bearish and crop conditions are good, to limit buying interest at present. Bulls need a weather market in the U.S. Midwest to develop. More years than not, one does develop in the summer, to some degree. Prices will grind mostly sideways until then.
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