Wednesday, May 6–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to firmer in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors are showing a bit more risk appetite at mid-week, as Nymex crude oil futures prices have rebounded sharply from single-digit levels seen in late April. Also, U.S.-China tensions have ratcheted down just a bit as both sides have toned down their harsh rhetoric—at least for the moment. Still, the Covid-19 pandemic lingers to keep the marketplace generally uneasy. While parts of North America and Europe reopen for business, the numbers of Covid-19 cases and deaths in the U.S. continue to rise at an alarming rate.
In overnight news, the Euro zone retail sales in March were reported down 11.2% from February and down 9.2%, year-on-year. Those numbers were records for declines. Also, the Euro zone services purchasing managers index (PMI) was reported at 12.0 for April. A reading below 50.0 suggests contraction in the sector.
In the U.S., today’s ADP national employment report is out and will be a precursor to Friday morning’s more important employment situation report from the U.S. Labor Department. The forecast for the ADP number is down 22 million jobs in April versus down 27,000 in March.
The important outside markets see Nymex crude oil prices higher and trading around $25.50 a barrel in June futures. Prices have more than doubled from the recent low. The U.S. dollar index is higher again today and the greenback bulls are having a good week. The Euro currency is pressured this week as the European Central Bank’s authority to stimulate the Euro zone economy has been called into question by Germany.
Other U.S. economic reports out Wednesday include the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the global services PMI.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher again in early U.S. trading. Bulls have the near-term technical advantage amid a near-term uptrend on the daily chart. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at 2,900.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,843.50 and then at Tuesday’s low of 2,824.50. Wyckoff’s Intra-day Market Rating: 6.0
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 neutral early today. The 4-day moving average is even with 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 9,020.00 and then at 9,100.00. On the downside, short-term support is seen at the overnight low of 8,877.75 and then at Tuesday’s low of 8,798.50. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls still have the overall technical advantage but are fading this week. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 180 8/32 and then at 181 even. Shorter-term support lies at the overnight low of 179 21/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower in early U.S. trading. Bulls are fading this week but still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 138.26.0 and then at 139.00.0. Shorter-term technical support lies at 138.17.0 and then at 138.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the overall near-term technical advantage and are having a good week. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.265 and then at 100.500. Shorter-term support is seen at the overnight low of 99.800 and then at 99.375. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher and hit a three-week high in early U.S. trading. It strongly appears a market bottom is in place. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $27.00 and then at $28.00. Look for sell stops just below technical support at the overnight low of $24.05 and then at $23.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mixed in early US pre-market trading. Grain bears remain in firm technical control, suggesting still more downside in the grain futures prices in the near term, amid Covid-19-induced global demand worries that are presently superseding other supply and demand elements in the grains.
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