Wednesday, May 26–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly firmer overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Discussion in the marketplace continues on the recent acceleration of inflationary price pressures and what the Federal Reserve and other central banks plan to do about it. The Fed says rising inflation is “transitory,” but many markets’ price actions suggest otherwise. Traders today will closely scrutinize comments from Federal Reserve vice chair for supervision Randal Quarles, scheduled to give a speech today. Meantime, a European Central Bank official Wednesday said the ECB has no plans to scale back its bond-buying program (quantitative easing) anytime soon.
Featured overnight is the New Zealand dollar gaining 1% against the U.S. dollar after New Zealand’s central bank hinted it could raise interest rates late next year.
The key outside markets today see the U.S. dollar index firmer on a corrective bounce after hitting a 4.5-month low Tuesday. Meantime, Nymex crude oil prices are slightly lower and trading around $65.80 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.567%.
U.S. economic data due for release Wednesday is light and includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and back near 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 4,202.25 and then at the contract high of 4,228.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,133.50 and then at 4,100.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
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 this week’s high of 13,726.25 and then at 13,804.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at Tuesday’s low of 13,599.75 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 near steady in early U.S. trading today. Bears have the overall near-term technical advantage but bulls have gained some momentum recently. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 157 16/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 23/32 and then at Tuesday’s low of 156 3/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are near steady 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 bullish early today. Shorter-term resistance lies at this week’s high of 132.05.0 and then at 132.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.30.5 and then at 131.23.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The September 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 the February high of 1.2294 and then at 1.2300. Buy stops likely reside just above those levels. Shorter-term support is seen at Tuesday’s low of 1.2237 and then at this week’s low of 1.2198. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are not far below this year’s highs. The shorter-term moving averages are neutral early today as the 4-day is above the 9-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 the May high of $67.02 and then at $68.00. Look for sell stops just below technical support at Tuesday’s low of $65.41 and then at $65.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are mixed but mostly weaker in early U.S. pre-market trading, following Tuesday’s sharp to strong losses, led by corn. Significant to serious chart damage has been inflicted in the grain futures recently, to strongly suggest that near-term market tops are in place. It’s going to very likely take a serious weather market scare in the Corn Belt this summer to 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