Monday, June 8–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The Nasdaq hit a record high overnight, while the S&P 500 stock index hit a three-month high. Businesses in major global economies continue to reopen and that’s lifting trader and investor spirits. However, the more social interaction the past couple weeks has caused an increase in Covid-19 infections in some U.S. states. Still, that could be just because more testing for infections is being done than in weeks past. Also, the civil unrest in the U.S. has turned much less violent and by far mostly peaceful.
The marketplace is mostly shrugging off some stated reporting errors in Friday’s shockingly upbeat U.S. employment report from the Labor Department. Those reporting errors made the report look more rosy than it would have been otherwise, but the errors were not major. Friday’s report suggested the U.S. economy will see a “V-shaped” recovery from the Covid-19 damage. “We are likely to see the shortest (U.S.) recession on record,” said one market analyst. Friday’s huge miss by analysts/economists on the jobs data in May raises questions on the accuracy of assumptions made by central banks, including the Federal Reserve, the past few months. Important questions include: What if the central banks greatly misjudged the overall damage to their economies and their recovery rates? Did the central banks severely over-react on monetary stimulus packages, which could create bigger problems (inflation) down the road?
In overnight news, economic data out of China was downbeat. China’s imports in May were down 16.7%, year-on-year. Exports were down 3.3% in the same period.
The important outside markets see the U.S. dollar index slightly lower early today and not far above last Friday’s 11-week low. Meantime, Nymex crude oil prices are higher and trading around $39.75 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.91% level. Bond yields have risen significantly the past few sessions.
U.S. economic data due for release Monday is light and includes the employment trends index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher and hit a 13-week high in early U.S. trading. 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 3,225.00 and then at 3,250.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,173.00 and then at 3,150.00. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher and hit a record high in early U.S. trading. 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 early today. Shorter-term technical resistance is seen at the overnight high of 9,855.00 and then at 9,900.00. On the downside, shorter-term support is seen at 9,700.00 and then at 9,600.00. 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. Bears have gained 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 to bearish early today. Shorter-term technical resistance is seen at 173 even and then at 174 even. Shorter-term support lies at the overnight low of 171 23/32 and then at last week’s low of 170 30/32. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls have faded. 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 bearish early today. Shorter-term resistance lies at 137.10.0 and then at 137.16.0. Shorter-term technical support lies at the overnight low of 136.30.0 and then at last week’s low of 136.22.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer on a corrective bounce after hitting an 11-week low 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 97.250 and then at 97.500. Shorter-term support is seen at the overnight low of 96.675 and then at last week’s low of 96.460. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly higher and hit a three-month high of $40.44 overnight. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at $40.44 and then at $41.00. Look for sell stops just below technical support at the overnight low of $38.81 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. Short covering and some bargain hunting have been featured in the grains recently. Still, 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