Tuesday, June 11–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly higher again overnight, led by solid gains in China shares. The Chinese government moved to further stimulate its economy by announcing major infrastructure projects. The move by China’s government is an effort to offset the negative economic effects of the ongoing trade war with the U.S. The U.S. stock indexes are also pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted strong gains the past week and have bullish technical momentum on their side to suggest a test of the contract/record highs, or above.
The U.S. economic data point of the day is the producer price index report for May, which is expected to come in at up 0.1% from April. Very low inflation levels not only in the U.S. but most of the world are an element that could allow the Federal Reserve to lower U.S. interest rates as soon as this summer.
The key “outside markets” today see Nymex crude oil prices higher and trading just below $54.00 a barrel. The U.S. dollar index is near steady today, but is in a near-term price downtrend and there are chart clues the USDX has put in a near-term top.
U.S. economic data due for release Tuesday includes the NFIB small business index, the Goldman Sachs and Johnson Redbook retail sales reports, the producer price index, the IDB/TIPP economic optimism index, and the USDA monthly supply and demand report for grains.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer and near this week’s four-week high in early U.S. trading. Bulls have good upside momentum to suggest more gains and a challenge of the recent highs. 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 below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at Monday’s high of 2,910.00 and then at 2,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,884.50 and then at 2,865.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are higher and near this week’s three-week high in early U.S. trading. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at Monday’s high of 7,603.50 and then at 7,666.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,532.25 and then at 7,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading, on more profit taking from recent gains. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 153 even and then at the overnight high of 153 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at 152 16/32 and then at 152 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading, on more profit taking. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term support lies at last week’s low of 126.12.0 and then at 126.08.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 126.20.0 and then at the overnight high of 126.26.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded badly recently to suggest the USDX has put in a market top. 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 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 Monday’s high of 96.40 and then at 96.595. Shorter-term support is seen at Monday’s low of 96.050 and then at last week’s low of 95.890. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
July Nymex crude oil prices are higher in early U.S. trading. Bears are still in near-term technical control. A price downtrend is still in place on the daily chart. The shorter-term moving averages are still 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $54.84 and then at $55.00. Look for sell stops just below technical support at Monday’s low of $53.05 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were lower overnight, with corn down around 4 cents, soybeans off around 5 cents and wheat down around 10 to 11 cents. USDA’s weekly crop progress updates showed U.S. corn planting at 83% complete, which was in line with market expectations and compares to 100% planted last year at this time. Soybean planting was seen at 60% completed, which was above market expectations but still well behind last year’s pace of 93% completed. The first corn condition rating was 59% good to excellent condition, which was above market expectations. Hard red spring wheat condition was pegged at 81% good to excellent, which was in line with market expectations. Traders are now focused on the midday Tuesday USDA supply and demand report. That report sees the trade thinking monthly U.S. and world supply and demand forecasts will come up well shy of most trade estimates on U.S. corn and soybean planted acres and yield reductions, but could lower U.S. grain export projections based on the current slower pace and rising global competition. Look for more active grain futures trading in the immediate aftermath of that midday report. U.S. Corn Belt weather has turned drier the past few days, which has allowed for strong planting progress for U.S. corn and soybeans. However, cooler temperatures in the Midwest over the next week now has raise some concern about scant “growing degree days” needed for corn and soybean plants to mature.
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