Friday, May 15–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Many traders and investors are wondering how the U.S. stock market has rebounded so strongly, what with 36 million American workers losing their jobs in just two months’ time and a vast number of businesses and commerce still shuttered. Bigshot investment managers have gone on TV this week to say the U.S. stock market is presently the most over-valued they have ever seen it. However, these guys are likely just “talking their own book.” Still, the general public is taking a dim view of Wall Street recovering smartly, while main street continues to see major suffering. There are growing tensions as workers in the lower halves of nations’ income levels, who have seen the most job losses and who have the least amount of money saved, desperately need to get back to work but many governments won’t let them. This situation cannot go on for an extended period of time without civil unrest, which is already being seen in a few areas. This growing unease has likely helped gold get a better safe-haven bid recently.
In overnight news, the Euro zone first-quarter gross domestic product came in at -3.8% from the fourth quarter and down 3.2%, year-on-year.
Economic data released in China Friday was somewhat upbeat, showing that the world’s second-largest economy is recovering from the first-quarter quarantining of the public. However, a worrisome component of the data was that retail sales fell 7.5% in April, suggesting consumers, while back to work, are still leery about spending.
The important outside markets see Nymex crude oil futures higher early today and trading around $28.00 a barrel. The recent rally in the crude oil market has been a bullish element for the stock markets’ rallies. The U.S. dollar index is lower today. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.62%.
There will be important U.S. economic data out Friday morning that will likely reflect the serious damage being inflicted upon the world’s largest economy. Due out are April retail sales (seen down around 12%), industrial production for April (seen down 11%), the University of Michigan consumer sentiment survey, the Empire State manufacturing survey, manufacturing and trade inventories, and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly down in early U.S. trading. Bulls this week lost their slight near-term technical advantage amid a near-term uptrend that has stalled out. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 2,876.75 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 2,760.25 and then at 2,717.25. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are weaker in early U.S. trading. A price uptrend is still 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 bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 9,202.75 and then at this week’s high of 9,345.00. On the downside, shorter-term support is seen at this week’s low of 8,847.00 and then at 8,800.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading. Bulls have the overall technical advantage and have gained momentum this week. 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 bullish early today. Shorter-term technical resistance is seen at 182 even and then at 182 16/32. Shorter-term support lies at 181 even and then at Thursday’s low of 180 12/32. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage and have gained momentum this week. 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 bullish early today. Shorter-term resistance lies at 139.22.0 and then at 140.00.0. Shorter-term technical support lies at the overnight low of 139.09.5 and then at 139.01.0. 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 weaker 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 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 100.605 and then at 101.030. Shorter-term support is seen at 100.00 and then at this week’s low of 99.585. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are higher and hit a four-week high in early U.S. trading. Bulls are working on a price uptrend. 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 $28.00 and then at $29.00. Look for sell stops just below technical support at $27.00 and then at $26.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are firmer in early U.S. pre-market trading, on short covering. Bulls face an uphill battle in the coming weeks. The U.S. corn and soybean crops are being planted at a rapid pace amid generally good weather. Covid-19 has created a serious demand shock for the grains, and grain bears remain in overall technical control, even though market bottoms appear to be in place. The grain market bulls need a serious weather market scare somewhere in a major producing region of the world.
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