Friday, May 26–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were lower Friday, on the back of sharp losses in the crude oil futures market seen on Thursday. Overseas markets fell despite U.S. stock indexes posting record highs Thursday. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
Gold prices are posting good gains in pre-U.S. day session trading. A weaker U.S. dollar index Friday is helping out the gold market bulls. Also, there is a bit of risk aversion in the marketplace heading into a long U.S. holiday weekend. News that President Donald Trump’s son-in-law is being investigated by the FBI regarding Russia’s involvement in the U.S. presidential election is also adding some uncertainty to the marketplace.
The focal point of the U.S. trading session will be the second estimate of first-quarter gross domestic product. First-quarter GDP is expected to come in at up 0.8% versus the initial estimate of up 0.7%. A miss to the downside could prompt the Federal Reserve to rethink its monetary policy strategy, which is presently to initiate more slight interest rate increases this year.
The other key outside market on Friday sees Nymex crude oil futures prices a bit firmer on a corrective bounce from the sharp losses posted Thursday. The oil market bears have gained some near-term technical strength to begin to suggest the market put in a near-term top this week.
Other U.S. economic data due for release Friday includes durable goods orders and the University of Michigan consumer sentiment survey is also released.
–Jim
U.S. STOCK INDEXES
S&P 500 June e-mini futures: Prices are slightly lower on mild profit taking after hitting a new contract and record high on Thursday. The bulls still have the strong 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 and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 2,417.75 and then at 2,430.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 2,402.50 and then at 2,494.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index June futures: Prices are slightly lower in early U.S. trading, on mild profit taking after hitting a record and contract high Thursday. Bulls have the strong overall 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract high of 5,795.50 and then at 5,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 5,750.00 and then at Thursday’s low of 5,731.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the May high of 154 13/32 and then at 155 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 25/32 and then at 153 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at 126.16.0 and then at 126.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.04.0 and then at 126.00.0. 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 lower in early U.S. trading. Bears have the firm overall near-term technical advantage. 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 with the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.375 and then at 97.740. Shorter-term support is seen at this week’s low of 96.700 and then at 96.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly higher in early U.S. trading. Thursday’s big losses have given the bears new technical strength, to begin to suggest that a near-term market top is in place. Look for buy stops to reside just above technical resistance at $49.50 and then at $50.00. Look for sell stops just below technical support at the overnight low of $48.21 and then at $48.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures markets were narrowly mixed overnight. Trading remains choppy in corn. Soybeans and wheat are firmly bearish. Weather in the U.S. Corn Belt remains mostly non-threatening, which is bearish. It’s going to take a weather scare in the U.S. Corn Belt to jumpstart any significant rallies in the grains in the coming weeks. The odds are good that a weather scare will develop in the next six weeks.