Thursday, May 25–Jim Wyckoff’s morning markets report
Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward mixed to firmer openings when the New York day session begins. The marketplace is getting more anxious as U.S. lawmakers and the Biden administration have not come to an agreement to extend the government debt limit. U.S. Treasury Secretary Yellen has said the government could run out of money by June 1.
Reports said the Fitch credit-rating agency put the U.S. on watch for a possible downgrade. “Fitch still expects a resolution to the debt limit before the X-date (1 June),” the credit agency said in a report. Both Fitch and Moody’s currently rate the U.S. debt at top AAA and Aaa, respectively, while S&P ranks it at AA+ after a downgrade in 2011 amid debt-ceiling negotiations during that time.
In other overnight news, Germany’s economy, the workhorse of the European Union, slipped into recession in the first quarter. Germany’s 1Q GDP was revised to -0.3%. The German economy contracted by 0.5% in the fourth quarter of 2022.
The key outside markets today see the U.S. dollar index firmer hitting another two-month high overnight. Nymex crude oil prices are lower and trading around $73.25 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching around 3.7%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the second estimate of first-quarter GDP, pending home sales and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher in early U.S. trading. 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 bearish early today. Today, shorter-term technical resistance comes in at 4,200.00 and then at the February high of 4,244.00. Support for active traders is seen at this week’s low of 4,114.00 and then at the May low of 4,062.25. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are solidly higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-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 13,979.25 and then at 14,100.00. On the downside, shorter-term support is seen at this week’s low of 13,566.50 and then at 13,400.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower and hit a 2.5-month low in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 127 even and then at this week’s high of 127 24/32. Shorter-term support lies at the overnight low of 125 29/32 and then at 125 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower and hit a nine-week low in early U.S. 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 bearish early today. Shorter-term resistance lies at the overnight high of 113.12.5 and then at this week’s high of 113.30.0. Shorter-term technical support is seen at the overnight low of 113.00.0 and then at 112.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The June Euro currency futures are lower 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. 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 the overnight high of 1.0770 and then at this week’s high of 1.0848. Shorter-term support is seen at 1.0700 and then at 1.0650. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
July Nymex crude oil prices are lower in early U.S. trading. 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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $74.73 and then at $75.00. Look for sell stops just below technical support at Tuesday’s low of $71.71 and then at this week’s low of $70.67. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices were mixed overnight. On tap today is the weekly USDA export sales report. Risk aversion in the marketplace over the U.S. debt-extension impasse and worries about rising Covid cases in China are bearish for the grains. The near-term technical postures for soybeans, meal, bean oil, wheat and corn futures are all still bearish. However, corn bulls have momentum to suggest a market bottom is in place.
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