Wednesday, May 13–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Traders and investors at mid-week are staying mostly upbeat despite increasing concerns about a second wave of Covid-19 infections hitting the world’s major economies that are starting to open back up. The top U.S. health official on Tuesday warned the U.S. Congress about the dangers of reopening the economy too early. Also, the specter of a renewed U.S.-China trade war, or worse, looms in the background after recent harsh rhetoric coming from both sides and directed at the other.
In overnight news, Eurozone factory output in March dropped 11.3% from February, which was a monthly record. Also, U.K. GDP dropped 2.0% in the latest quarter.
The marketplace will be watching Federal Reserve Chairman Jerome Powell in a morning webcast to an economics group, and especially wanting to hear this thoughts on U.S. interest rates that could fall into negative territory. President Trump tweeted Tuesday he could be in favor of such occurring. This matter is of special interest to precious metals traders, as the knock on investing in gold has been that it offers investors no dividend. Interest rates at or below zero work to eliminate the “opportunity cost” associated with owning precious metals.
The important outside markets see Nymex crude oil futures slightly lower early today and trading around $25.50 a barrel. The U.S. dollar index is slightly up today. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.66%.
U.S. economic reports out Wednesday include the weekly MBA mortgage applications survey, the producer price index and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are modestly up in early U.S. trading. Bulls have the slight near-term technical advantage amid a near-term uptrend that has turned sideways on the daily chart. The shorter-term moving averages (4-, 9- and 18-day) are still 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 this week’s high of 2,947.00 and then at the April high of 2,965.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,825.25 and then at 2,800.00. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are higher in early U.S. trading. A price uptrend is in place on the daily chart. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 9,345.00 and then at 9,400.00. On the downside, shorter-term support is seen at the overnight low of 8,997.00 and then at 8,900.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are modestly up in early U.S. trading. Bulls have the overall technical advantage amid recent choppy trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-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 180 18/32 and then at 181 even. Shorter-term support lies at the overnight low of 179 28/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage but trading has been sideways and choppy at higher levels for weeks. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-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 139.06.5 and then at 139.16.0. Shorter-term technical support lies at 139.00.0 and then at this week’s low of 138.18.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly lower in early U.S. trading. Bulls have the overall near-term technical advantage but trading has been sideways and choppy recently. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is even with the 18-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 this week’s high of 100.510 and then at 100.975. Shorter-term support is seen at this week’s low of 99.685 and then at 99.460. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are near steady in early U.S. trading. It strongly appears a market bottom is in place. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the May high of $26.74 and then at $27.00. Look for sell stops just below technical support at $25.00 and then at this week’s low of $23.67. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are weaker in early U.S. pre-market trading. Grain bears remain in overall technical control, even though market bottoms appear to be in place. Grain traders are moving closer to focusing more on specific grain supply and demand fundamentals and less on the macro global developments that have overshadowed most markets.
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