Thursday, May 9–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S.-China trade war is on the brink of escalation, with both sides apparently digging in their heels and threatening new sanctions on each other. Chinese trade officials are in Washington Thursday to continue discussions. New U.S. tariffs on Chinese imported goods are set to go into effect at midnight tonight, with most now thinking no substantive deal can be reached at this time. President Trump said at a rally Wednesday evening that China “broke the deal.”
World government bond yields are declining amid concerns an escalation in the trade war between the world’s two largest economies will lead to slower global economic growth.
The Chinese yuan Thursday fell to its lowest level against the U.S. dollar since January.
The U.S.-China trade conflict is presently overshadowing another potential geopolitical flashpoint. Iran’s government said this week it will stop complying with some commitments it made in the United Nations nuclear deal in 2015. This week the U.S. sent a naval task force to the Persian Gulf, including an aircraft carrier, due to what the U.S. said were threats against the U.S. in the region. One miscalculation by either side could lead to serious military conflict.
In another interesting and seemingly contradictory development, the United Nations’ Food and Agriculture Organization (FAO) said global food prices rose 1.5% in April from March and hit a 10-month high. This report comes amid several major world economies releasing their producer and consumer price indexes that are generally reading under 2% inflation for the entire year. The FAO food inflation reading for April was 2.3% below the April 2018 reading, however. Many consumers would argue the FAO numbers are the correct ones.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading just below $62.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index, the international trade report, monthly wholesale trade, and the monthly chair store sales index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower and hit a four-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but a price uptrend on the daily chart has been negated to suggest a market top is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,885.50 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,858.00 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower and hit a four-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but a price uptrend on the daily bar chart has been negated to suggest a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,644.50 and then at 7,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,558.50 and then at 7,500.00. Sell stops are likely located 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 higher in early U.S. trading. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9- and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 148 28/32 and then at this week’s high of 149 6/32. Buy stops likely reside just above those levels. Shorter-term support lies at 148 10/32 and then at the overnight low of 148 4/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage. 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 bullish early today. Shorter-term support lies at the overnight low of 123.23.5 and then at this week’s low of 123.18.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 124.06.0 and then at 124.12.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly higher early today. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.510 and then at last week’s high of 98.865. Shorter-term support is seen at this week’s low of 97.135 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
June Nymex crude oil prices are near steady in early U.S. trading. Bulls are fading to suggest a market top is in place. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-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 this week’s high of $62.95 and then at $64.00. Look for sell stops just below technical support at this week’s low of $60.04 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were lower overnight. Grain market bears have the solid overall near-term technical advantage. Focus is on U.S.-China trade discussions that are again souring. Corn Belt weather is mostly wet right now and causing planting delays. Traders are also awaiting this morning’s weekly USDA export sales data and Friday morning’s USDA supply and demand report.
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