Friday, May 19–Jim Wyckoff’s morning markets report
Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Stock market bulls are having a good week. The Nasdaq index is at an 8.5-month high and the S&P 500 stock index hit a 3.5-month high overnight. Trader and investor sentiment has been lifted as it appears the U.S. Congress and the Bident administration will come to an agreement to raise the U.S. government’s debt ceiling and avoid a default on its obligations. Matters such as the inverted U.S. Treasury yield curve, which has been a historical signal of impending economic recession, and the banking turmoil have moved to the back burner of the marketplace—at least for now.
In overnight news, Japan’s Nikkei stock index hit a 33-year high and has risen 18% so far this year. Part of the reason for the rally in Japanese shares is that Warren Buffet last month said he has more Japanese stocks in Berkshire Hathaway’s portfolio than any other country, save for the U.S. “Japan looks cheap,” said a Wall Street Journal article.
The key outside markets today see the U.S. dollar index lower on a corrective pullback after hitting a seven-week high Thursday. The apparent U.S. debt extension agreement and a still-hawkish Federal Reserve are boosting the greenback. Nymex crude oil prices are higher and trading around $72.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.646%. Bond yields have risen this week.
There is no major U.S. economic data due for release Friday.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are firmer and hit a 3.5-month high in early U.S. trading. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the February high of 4,244.00 and then at 4,275.00. Support for active traders is seen at Thursday’s low of 4,161.25 and then at this week’s low of 4,120.00. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are slightly up in early U.S. trading and hit an 8.5-month high. 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 bearish early today. Shorter-term technical resistance is seen at 14,000.00 and then at 14,100.00. On the downside, shorter-term support is seen at Thursday’s low of 13,628.25 and then at Wednesday’s low of 13,474.25. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are a bit weaker and hit a nine-week low in early U.S. trading. Bulls are fading. 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 128 even and then at 129 even. Shorter-term support lies at 127 even and then at 126 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are near steady 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 Thursday’s high of 114.24.0 and then at 115.00.0. Shorter-term technical support is seen at this week’s low of 113.27.5 and then at 113.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The June Euro currency futures are higher on short covering after hitting a six-week low in overnight 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 neutral to bullish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.0926 and then at 1.1000. Shorter-term support is seen at the overnight low of 1.0778 and then at 1.0750. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below 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 $73.89 and then at $75.00. Look for sell stops just below technical support at $71.00 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were firmer overnight on tepid short covering. Bulls have faded badly this week. Corn and soybeans are well oversold, on a near-term technical basis, and due for corrective bounces soon. The near-term technical postures for soybeans, meal, bean oil, SRW wheat and corn futures are all bearish. HRW wheat is still bullish. Seasonal price studies at present favor the grain market bears. Weather in the U.S. Midwest remains generally bearish for corn and soybeans and neutral for wheat.
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