Friday, April 16–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward mixed openings and at or near record highs when the New York day session begins. Strong U.S. and China economic data this week have charged up the stock market bulls, who reckon the world’s two largest economies, and maybe even Europe and Japan, will see strong economic growth in the coming months, or longer.
China’s economy grew by 18.3% in the first quarter, year-over-year, with retail sales up 34% in March. However, the record 1Q GDP growth is slowing rapidly as manufacturing and consumer spending return to more normal levels. Keep in mind one year ago at this time China’s economy was dealing with the pandemic, including lockdowns. First-quarter GDP growth compared with 2020’s fourth quarter, when a recovery was under way, slowed to 0.6% growth–among the weakest of the past decade. For all of 2020, China’s GDP was up 2.3%–the only major economy to show growth in 2020. Still, the latest figures “mask a sharp slowdown” in the world’s second-largest economy as stimulus spending and easy credit are wound down, said Julian Evans-Pritchard of Capital Economics in a report.
In other news, the Biden administration is already levying sanctions on Russia in retaliation for the SolarWinds hack and efforts to disrupt the U.S. elections. The U.S. has expelled Russian diplomats.
Meantime, the Euro zone March consumer price index was reported up 0.9% from February and up 1.3%, year-on-year. Those numbers are still tame, in an environment where many think inflation is rising at a trajectory that will become problematic in the coming months.
The key outside markets today see the U.S. dollar index slightly down. The greenback bulls have suffered this week. Nymex crude oil prices are near steady and trading around $63.45 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.576%.
U.S. economic data due for release Friday includes new residential construction and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading and poked to another contract and record high overnight. 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the record high of 4,167.75 and then at 4,185.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,130.00 and then at this week’s low of 4,101.25. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are slightly lower in early U.S. trading and not far below this week’s record high. 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 contract high of 14,034.25 and then at 14,100.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 13,900.00 and then at 13,800.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading today on a corrective pullback from strong gains seen Thursday. Bears still have the overall near-term technical advantage. However, recent sideways price action at lower levels may be “basing” that puts in a market bottom. Prices are also in a fledgling uptrend on the daily chart. 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 early today. Shorter-term technical resistance is seen at this week’s high of 159 1/32 and then at 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 21/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 132.22.0 and then at 132.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.08.5 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The June Euro currency futures are a bit firmer in early U.S. trading and hit a four-week high overnight. 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 1.2014 and then at 1.2050. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1964 and then at 1.1925. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are slightly up in early U.S. trading and poked to a four-week high overnight. Bulls have the firm overall near-term technical advantage and have gained power with Wednesday’s upside “breakout” from the sideways trading range. The shorter-term moving averages are bullish early today as the 4-day is above the 9-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 the overnight high of $63.88 and then at $64.50. Look for sell stops just below technical support at Thursday’s low of $62.53 and then at $62.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. Bulls are having a very good week. Weather in the U.S. midsection will be market-sensitive in the coming weeks as corn planters start to roll. Right now, cold weather and even some snow forecast for the Corn Belt is supportive for prices. The world supply and demand balance sheet for the grains remains bullish—especially for corn and soybeans.
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