Monday, March 30–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Traders and investors are entering another week uncertainty, as the mood of the marketplace has turned from panic to gloom. U.S. President Trump on Sunday extended the shutdown of most U.S. retail businesses and schools by another 30 days, to April 30. The U.S. can expect a best-case scenario of around 100,000 to 200,000 deaths and millions infected with the illness, said the top U.S. health official over the weekend.
As the first quarter comes to an end Tuesday, market watchers are wondering how many companies and individuals hurt by the coronavirus outbreak can pay their bills, including a domino effect occurring on the matter as the global economy seizes up. Also in question are the major credit ratings agencies and how they will deal with the many big companies that are in a serious financial bind. It’s tough to be a buyer of any markets at all in these conditions, and with the ultimate ramifications of the Covid-19 outbreak still so uncertain.
The important outside markets today see Nymex crude oil prices weaker and hitting an 18-year low of $19.92 a barrel overnight. The U.S. energy industry has shuddered the past three weeks, which has led to much of the selling pressure in the stock market. The U.S. dollar index is higher on a corrective bounce after last week’s strong losses. The 10-year U.S. Treasury note yield is trading around 0.64% Monday morning–well down from last week’s levels.
U.S. economic data due for release Monday includes pending home sales and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bears have the 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 above 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 2,567.50 and then at 2,600.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,445.00 and then at 2,400.00. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are near steady in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 7,690.00 and then at 7,800.00. On the downside, short-term support is seen at 7,400.00 and then at 7,400.00. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are solidly higher and hit a two-week high in early U.S. trading. Bulls have the firm near-term technical advantage. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 181 22/32 and then at 182 even. Shorter-term support lies at the overnight low of 180 13/32 and then at 180 even. Wyckoff’s Intra-Day Market Rating: 7.0
June U.S. T-Notes: Prices are solidly higher and hit a two-week high in early U.S. trading. Bulls have the firm technical advantage. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 139.06.4 and then at 139.16.0. Shorter-term technical support lies at the overnight low of 138.19.0 and then at 138.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading, on a corrective bounce from last week’s strong losses. Bulls and bears are on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above 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 99.500 and then at 100.000. Shorter-term support is seen at last week’s low of 98.345 and then at 98.000. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are lower and hit an 18-year low in early U.S. trading. Bears have the solid overall near-term technical advantage amid a price downtrend in place. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $20.93 and then at $22.00. Look for sell stops just below technical support at the overnight low of $19.92 and then at $19.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early US pre-market trading. While the grain futures markets appear to have stabilized, the gloomy global economic picture will keep rallies modest, including wheat, after its recent run higher. Wheat bulls still have the overall near-term technical advantage, with soybeans in a neutral posture and corn remains bearish. Traders will closely examine today’s weekly USDA export inspections report. On Tuesday one of the most important USDA data releases occurs as the U.S. planting intentions and quarterly grain stocks reports are released.
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