Thursday, June 10–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with European shares mostly flat and Asian shares mostly firmer. U.S. stock indexes are once again pointed toward narrowly mixed openings when the New York day session begins. The global marketplace remains calm at present, amid no major geopolitical flareups in play and some typical summertime-doldrums trading occurring.
Traders are awaiting the U.S. economic data point of the week, which will be Thursday morning’s consumer price index report for May, which is expected to come in at up 0.5% from April and up 4.7%, year-on-year. Traders and investors continue their buzz regarding the prospects for inflation to heat up to uncomfortable levels in the coming months.
What has possibly flown under the radar screen of many in the marketplace recently is the quiet, steady decline in U.S. Treasury yields, which this week dropped to more-than-three-month lows. The yield on the benchmark 10-year U.S. Treasury note is presently fetching 1.503%. Rising raw commodity prices and some supply shortages, combined with major economies busting out of their pandemic shackles, have raised the specter of rising and possibly problematic price inflation in the coming months. However, the big element that does not jibe with the steepening inflation theory is U.S. government bond yields that remain near historically low levels. The stubbornly low U.S. bond yields support the Federal Reserve’s assertions that the rising trajectory of inflation is only transitory.
The European Central Bank is holding its regular monetary policy meeting on Thursday. No change in monetary policy is expected.
The marketplace will monitor the weekend meeting of the Group of Seven countries. A draft of the meeting communique shows the group will focus on its collective relations with China and Russia.
The key outside markets today see the U.S. dollar index slightly higher. Nymex crude oil prices are slightly up and trading around $70.00 a barrel after hitting a 2.5-year high of $70.62 on Wednesday.
Other U.S. economic data due for release Wednesday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and very close to the recent record high. Bulls have the solid overall near-term technical advantage. The 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 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 the contract high of 4,228.25 and then at 4,250.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,180.00 and then at last week low of 4,155.50. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are a bit lower in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 13,829.25 and then at this week’s high of 13,906.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 13,685.00 and then at 13,600.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower on profit taking after hitting a more-than-three-month high on Wednesday. Bulls have started a price uptrend on the daily chart. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 159 6/32 and then at 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at Wednesday’s low of 157 26/32 and then at this week’s low of 156 31/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are lower on profit taking after hitting a more-than-three-month high on Wednesday. Bulls have momentum amid a price uptrend in place on the daily chart. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 132.27.0 and then at this week’s high of 132.29.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Wednesday’s low of 132.11.5 and then at this week’s low of 132.00.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The September Euro currency futures are slightly lower 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 and 18-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 1.2203 and then at this week’s high of 1.2241. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.2168 and then at last week’s low of 1.2127. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Nymex crude oil prices are a bit higher in early U.S. trading after hitting a 2.5-year high on Wednesday. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at this week’s high of $70.62 and then at $71.00. Look for sell stops just below technical support at the overnight low of $69.29 and then at $68.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures are mixed to firmer in early U.S. pre-market trading. It’s still a weather market in the grains. The extended weather forecasts for through at least late-June are calling for warmer and mostly drier weather conditions in much of the U.S. midsection. Expect more high daily volatility in the grain futures markets this week. Today comes the monthly USDA supply and demand report, but focus will quickly turn to the weather after the report is released, which is expected to contain no big changes to last month’s numbers.
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