Monday, May 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. The discussion in the marketplace continues to be on whether inflationary pressures will grow to levels that create economic distress down the road. The line coming from the Federal Reserve at present is that rising inflation is only a “transitory” matter. However, other economists and market analysts say inflation cannot help but become problematic in the coming months and point to strong evidence in place already, including generally rising raw commodity prices.
In overnight news, China reported more generally strong economic data Monday, as industrial output in April was up 9.8%, year-on-year, while retail sales were up 17.7% in the period. The retail sales figure was less than forecast. These numbers coming out of the world’s second-largest economy certainly land in the higher-inflation camp.
Gold prices rose to a three-month high overnight as reports said money flows are moving back into the SPDR Gold Trust exchange traded fund—possibly due in part to the crypto currencies become more wobbly recently.
The key outside markets today see the U.S. dollar index lower. Meantime, Nymex crude oil prices are near steady and trading around $65.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.625%.
U.S. economic data due for release Monday includes the Empire State manufacturing survey, the NAHB housing market index, and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls have the overall near-term technical advantage. However, a near-term price uptrend on the daily chart was negated last week to still suggest a market top is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 4,178.75 and then at 4,200.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,125.00 and then at last Friday’s low of 4,105.25. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are weaker in early U.S. trading. The near-term price uptrend on the daily chart was negated last week to suggest a market top is in place. 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 13,448.50 and then at 13,500.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 13,250.00 and then at 13,200.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are a bit higher in early U.S. trading today, on short covering. Bears still 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 the overnight high of 157 14/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 24/32 and then at last Friday’s low of 156 3/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are slightly higher in early U.S. trading on short covering. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 132.21.5 and then at 132.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.12.0 and then at 132.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are higher 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 bullish early today. The Euro currency finds shorter-term technical resistance at the May 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 1.2133 and then at 1.2100. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral 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 $65.00 and then at $64.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. The bulls may be running out of gas. However, the corn and soybean markets are still in solid price uptrends on the daily and the longer-term charts. Wheat has seen its near-term price uptrends soundly negated, to suggest that market has topped out. And if wheat has put in a market top, I can’t see corn and soybeans continuing to make new highs. Thus, keep an extra close eye on the wheat market. It could be the downside leader for the near term. On tap today is the weekly USDA export sales 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