Wednesday, May 12–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. Some market analysts are blaming worries about problematic inflation for this week’s pullback in stock markets. The U.S. consumer price index is out on Wednesday morning and will be closely scrutinized. Forecasts call for April CPI to be up 0.2% from March and up 3.6%, year-on-year. The “reflation trade” is still on the front burner of marketplace chatter.
In overnight news, the European Union forecast its annual gross domestic product growth at 4.3% in 2021, up from its last estimate of 3.8% growth. The EU sees annual inflation in 2021 at 1.7%, and at 1.3% in 2022. These low inflation numbers point to lame price rises over the next two years, which contradict some of the recent indications that price inflation is heating up much more rapidly.
The marketplace is keeping a wary eye on the flare-up in the Middle East, as Israel and Hamas are stepping up their missile strikes against each other. The military action between the two is the most intense since 2014.
The key outside markets today see the U.S. dollar index firmer on a corrective bounce after prices Tuesday hit a 2.5-month low. Meantime, Nymex crude oil prices are higher and trading around $66.00 a barrel. The U.S. Colonial pipeline system that has been shut down due to a cyberattack is set to reopen temporarily. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.611%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the CPI, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading on more profit taking after hitting a record high Monday. Bulls still have the solid overall near-term technical advantage. There are no strong, early clues to suggest a market top is close at hand. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 4,150.50 and then at Tuesday’s high of 4,185.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,103.75 and then at 4,080.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower in early U.S. trading. 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 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 13,351.75 and then at 13,500.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,184.75 and then at this week’s low of 13,065.25. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading today. Bears have the 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 neutral early today. Shorter-term technical resistance is seen at 158 even and then at this week’s high of 158 12/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 26/32 and then at 156 6/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer 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 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 Tuesday’s high of 132.23.5 and then at this week’s high of 132.30.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.12.5 and then at 132.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are weaker in early U.S. trading. The shorter-term moving averages for the Euro 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 Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2189 and then at 1.2200. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.2122 and then at 1.2100. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at the May high of $66.76 and then at the March high of $67.29. Look for sell stops just below technical support at the overnight low of $64.97 and then at $64.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. Prices Monday saw heavy profit taking but prices bounced right back Tuesday—a sign the markets are still in strong bullish modes amid price uptrends still in place on the daily and the longer-term charts. On tap today is the monthly USDA supply and demand report, which could make for higher volatility after the 12:00 noon EDT report’s release.
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