Friday, June 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly weaker overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. The aftermath of the Fed’s FOMC meeting conclusion Wednesday afternoon, which produced a hawkish bent by the U.S. central bank, has very significantly altered the landscape of the marketplace. A look at markets’ price action the past 36 hours shows many of them had major, counter-trend moves that at the very least “wrong-footed” traders and investors and at worst made them become insolvent. Soybean oil futures, for example, had been trending solidly higher and last week hit a record high. Price action this week has seen that market careen sharply lower, including two days in a row of being “locked-limit-down,” meaning that those with bullish bets on the long side were trapped in the price downdraft and unable to exit their major losses. The lean hog futures market saw a similar scenario this week.
Bloomberg reports the U.S. Treasury yield curve has seen its biggest two-day tightening of spreads between shorter-term instruments and longer-term instruments since March of 2020, following the Wednesday FOMC meeting. The yield on the 30-year bond dropped to 2.07%, with investors pulling back their inflation bets after Fed officials signaled two rate hikes by the end of 2023. The marketplace apparently has taken heed to the Fed’s insistence that inflation will be only transitory. Consequently, the “reflation trade” has at least temporarily fizzled, as seen by Thursday’s major drubbing of most raw commodity futures markets.
The key outside markets today see the U.S. dollar index near steady and hitting another two-month high overnight. Nymex crude oil futures are a bit lower and trading around 70.75 a barrel. The yield on the benchmark U.S. 10-year Treasury note is fetching 1.487%.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on more mild profit taking, and still not far below Tuesday’s record and contract high. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 4,241.50 and then at the contract high of 4,258.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,183.00 and then at 4,160.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are a bit firmer in early U.S. trading and hit a record 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 to bearish early today. Shorter-term technical resistance is seen at the overnight contract high of 14,204.75 and then at 14,300.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 14,000.00 and then at this week’s low of 13,830.25. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading after hitting a nearly four-month high on Thursday. A price uptrend is in place on the daily chart and 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 160 24/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 14/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading. 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 132.11.0 and then at 132.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.28.0 and then at 131.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The September Euro currency futures are a bit weaker and hit a two-month low in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at 1.1950 and then at 1.2000. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1905 and then at 1.1850. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are weaker in early U.S. trading on mild profit taking after hitting a 2.5-year high on Wednesday. Bulls have the solid overall near-term technical advantage. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $71.12 and then at $72.00. Look for sell stops just below technical support at this week’s low of $69.77 and then at $69.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are sharply higher in early U.S. pre-market trading, on upside corrections from major losses posted Thursday. This week’s price action still suggests major market tops might be in place. The extended weather forecasts are calling more rain in the U.S. Midwest next week, but still nothing that would be considered a “drought-buster.” And the historically hotter and drier months of July and August lie just ahead. The strong rebound in the U.S. dollar index this week is bearish for the grains, making U.S. grains more expensive on the world market.
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