Friday, April 9–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Risk appetite remains generally keener at present, with no major geopolitical flare-ups spooking the marketplace.
A feature this week has been Wednesday’s minutes of the last Federal Reserve Open Market Committee (FOMC) meeting that took place in March, which saw the Fed reiterating it will keep its monetary policy very accommodative for some time to come. Wharton professor Jeremey Siegel on Thursday said Federal Reserve Chairman Jerome Powell is the most dovish Fed chair ever. In Powell’s defense, how many other Fed chiefs have had to deal with a pandemic that severely crippled the U.S. and the global economies, and still has both hobbled. Said a Bloomberg email dispatch this morning: “The reason why ‘don’t fight the Fed’ has been such a popular mantra for decades is that it prevents investors from losing lots of money. Even with that rich history, bond traders staged a mini-coup this year and priced in a far more aggressive path of Fed hikes than policy makers have indicated. Now it seems those intrepid traders are starting to capitulate. Treasuries have rallied in a big way this week, with five- and seven-year notes absorbing the bulk of that demand, suggesting that bets on Fed hikes are starting to be pared back.” Still, this 35-plus year market watcher thinks the inflation genie is out of the bottle (Ask anyone building or remodeling a home or business about material costs.) and that bond yields will have to continue to rise in the coming months, along with interest rates. China’s stock market was pressured Friday on a higher-than-expected inflation report. Some analysts reckon any spread of problematic global inflation will originate in China.
There was more civil unrest and rioting in Northern Ireland Friday, which the marketplace is continuing to monitor. Not a major market issue yet, but many believe the situation could get worse as the U.K. tries to figure out what to do with the rules of the region, post-Brexit.
The key outside markets today see the U.S. dollar index firmer on a bounce after solid selling pressure seen much of this week. Nymex crude oil prices are slightly up and trading around $59.75 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.66%.
U.S. economic data due for release Friday includes the producer price index and monthly wholesale trade.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and hit another contract and record high. 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 overnight record high of 4,102.50 and then at 4,125.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,050.00 and then at this week’s low of 4,021.00. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are slightly weaker in early U.S. trading after hitting a seven-week high overnight. 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 overnight high of 13,841.75 and then at the record high of 13,888.00. On the downside, shorter-term support is seen at Thursday’s low of 13,615.50 and then at 13,512.50. 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. Bears have the firm overall near-term technical advantage. However, recent sideways price action at lower levels may be “basing” that puts in a market bottom. 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 the overnight high of 157 4/32 and then at 157 8/32. Shorter-term support lies at this week’s low of 155 6/32 and then at 155 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are solidly lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 132.03.0 and then at 132.09.5. Shorter-term technical support lies at 131.16.0 and then at 131.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The June Euro currency futures are lower in early U.S. trading. Bulls still had a good week to begin to suggest a near-term market bottom is in place. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1943 and then at 1.1975. Shorter-term support is seen at 1.1876 and then at 1.1850. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
May Nymex crude oil prices are near steady in early U.S. trading. Bulls have the overall near-term technical advantage but trading has been choppy and sideways. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $60.90 and then at $62.00. Look for sell stops just below technical support at this week’s low of $57.63 and then at the March low of $57.25. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are mostly firmer in early U.S. pre-market trading. Corn and soybean bulls are in solid technical command and have gained fresh power this week. Wheat bulls have bounced back a bit and wheat will remain a follower. Focus of grain traders is on the late-morning monthly USDA supply and demand report, which is expected to be bullish. Weather in the U.S. midsection will be market-sensitive in the coming weeks.
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