Wednesday, May 31–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly up Wednesday, the last trading day of the month. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
Gold prices are slightly higher in pre-U.S. session trading.
In overnight news, the Euro zone May consumer price index came in at up 1.4%, year-on-year, versus up 1.9% in April. The May reading was a bit higher than forecast. China’s official purchasing managers index came in at 51.2 in May, which was slightly above market expectations.
The important “outside markets” on Wednesday morning find Nymex crude oil futures prices lower. The oil market bears have regained some downside momentum this week.
Meantime, the U.S. dollar index is also slightly lower. The greenback bears are still in near-term technical control as prices last week hit a six-month low and the dollar index is in a nearly three-month-old downtrend.
Traders and investors are looking forward to Friday’s U.S. employment report for May from the Labor Department. That report is arguably the most important U.S. economic data point of the month. The key non-farm payrolls number for May is forecast to come in at up around 210,000.
Several Federal Reserve Board members are scheduled to speak this week. Their comments will be parsed for clues on the timing of the next U.S. interest rate increase. The FOMC meets to discuss monetary policy in mid-June. Many Fed watchers think the June FOMC meeting will see a rate hike announced.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM Chicago business survey, pending home sales, and the Federal Reserve’s beige book.
–Jim
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are slightly higher in early U.S. trading. Prices are very close to the contract and record high last set week. The bulls have the strong near-term technical advantage. There are no early technical clues that a market top is close at hand. 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 early today. Today, shorter-term technical resistance comes in at the contract high of 2,414.75 and then at 2,425.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,400.00 and then at 2,385.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index September futures: Prices are firmer in early U.S. trading and hit another record and contract high overnight. Bulls have the strong overall near-term technical advantage and there are no early chart clues a market top is close at hand. 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 5,811.00 and then at 5,825.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 5,784.75 and then at 5,760.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are near steady in early U.S. trading. Bulls have the 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 and 18-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 May high of 153 15/32 and then at the contract high of 154 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 1/32 and then at this week’s low of 152 14/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
September U.S. T-Notes: Prices are slightly lower in early U.S. trading. Bulls still have the 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at this week’s high of 126.06.5 and then at 126.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.31.5 and then at this week’s low of 125.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker in early U.S. trading. Bears 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 above the 9-day. The 9-day is below 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 the overnight high of 97.200 and then at this week’s high of 97.480. Shorter-term support is seen at the overnight low of 96.840 and then at the May low of 96.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are lower in early U.S. trading. The bears have technical momentum to suggest that a near-term market top is in place. Look for buy stops to reside just above technical resistance at the overnight high of $49.71 and then at this week’s high of $50.28. Look for sell stops just below technical support at last week’s low of $48.18 and then at $47.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures markets were higher overnight on short covering. Trading remains choppy in corn. Soybeans and wheat are firmly bearish. Weather in the U.S. Corn Belt remains mostly non-threatening, which is bearish. It’s going to take a weather scare in the U.S. Corn Belt to jumpstart any significant rallies in the grains in the coming weeks. The odds are good that a weather scare will develop in the next six weeks.