Wednesday, April 15–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes are seeing downside corrections following recent good gains that have pulled them out of bear market territory (retracing over 50% of their recent declines). Lower crude oil prices that today see Nymex crude oil prices around $19.50 a barrel and hitting an 18.5-year low overnight are helping to pressure the stock markets today. The International Energy Agency (IEA) said in a report today that no “feasible” amount of crude oil production cuts can offset the demand destruction caused by Covid-19.
It can be argued that the recent gains in stock indexes are due in part to a battered raw commodity sector, led by crude oil’s descent, that has seen investor money flow out of hard assets and back into paper assets—equities and bonds. Gold is the outlier in the beleaguered raw commodity sector, as the yellow metal’s price this week rose to a 7.5-year high on safe-haven demand.
The International Monetary Fund on Tuesday warned the Covid-19 pandemic will slow global economic growth to the slowest since the Great Depression of the 1930s. The IMF forecast -6.6% economic contraction for advanced economies. The IMF forecast GDP growth returning to 5.8% in 2021. The agency estimates global the Covid-19 pandemic will peak in the second quarter and fade away in the second half of 2020. However, if the pandemic continues through the third quarter then such could knock another 3% off global economic growth. A second coronavirus outbreak in 2021 could lop another 5% off the global GDP growth for 2021.
The U.S. dollar index is higher this morning on a corrective rebound from recent selling pressure. The 10-year U.S. Treasury note yield is trading around 0.73% this morning.
U.S. economic reports due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, retail sales, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, the weekly DOE liquid energy stocks report, Treasury international capital data and the Federal Reserve’s beige book.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading, on a corrective pullback after hitting a four-week high Monday. Prices are still in a near-term uptrend on the daily chart. The 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 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 this week’s high of 2,846.00 and then at 2,875.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Tuesday’s low of 2,752.50 and then at this week’s low of 2,711.00. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower on a corrective pullback after hitting a four-week high Tuesday. A price uptrend is still 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 this week’s high of 8,710.00 and then at 8,800.00. On the downside, short-term support is seen at 8,500.00 and then at 8,400.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly higher in early U.S. trading. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 179 26/32 and then at 180 even. Shorter-term support lies at 179 even and then at 178 even. Wyckoff’s Intra-Day Market Rating: 7.0
June U.S. T-Notes: Prices are solidly higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 the overnight high of 138.27.0 and then at 139.00.0. Shorter-term technical support lies at the overnight low of 138.06.0 and then at 138.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The June U.S. dollar index is solidly higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 this week’s high of 99.640 and then at 100.000. Shorter-term support is seen at 99.000 and then at the overnight low of 98.620. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
May Nymex crude oil prices are lower and hit an 18-5-year low of $19.20 in early U.S. trading. The bears have the solid overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is below the 18-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 $20.00 and then at $21.00. Look for sell stops just below technical support at the overnight low of $19.20 and then at $19.00. Wyckoff’s Intra-Day Market Rating: 3.0
GRAINS
US grain futures are mostly lower in early US pre-market trading. Crude oil dropping to an 18.5-year low overnight is bearish for the grains. While U.S. and global stock markets have stabilized, which has been good for the grain market bulls, crippled global economies and supply chains remain a major bearish element for the grain markets. Technically, wheat bulls still have the overall near-term technical advantage, with soybeans and corn bears in technical control.
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