Wednesday, June 12–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly lower overnight. The U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. The U.S. indexes at mid-week have ended an impressive rally streak that lifted prices well up from the early-June three-month lows.
Gold prices are posting good gains today amid the keener risk aversion in the marketplace, as evidenced by the weaker global equity markets.
In overnight news, China’s May consumer price index hit a 15-month high, at up 2.7%, year-on-year. The CPI was up 2.5% in April. Food prices led the rise in CPI, with pork prices up 18%.
The U.S. economic data point of the day is the consumer price index report for May, which is expected to come in at up 0.1% from April and rising 0.3% last month. Very low worldwide inflation levels in major economies is giving central bankers more leeway to ease their monetary policies.
The key “outside markets” today see Nymex crude oil prices solidly lower and trading just below $52.00 a barrel, on world economic growth worries. The U.S. dollar index is near steady, 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 Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading, on a normal downside correction from recent good gains. Bulls still have some momentum to suggest more gains and a challenge of the recent highs. 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 neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 2,915.75 and then at 2,930.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,865.00 and then at 2,850.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are lower in early U.S. trading, on a normal corrective pullback from recent gains. 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 7,626.25 and then at 7,666.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,459.75 and then at 7,400.00. Sell stops are likely located 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 higher in early U.S. trading. Bulls 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 154 6/32 and then at the contract high of 155 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 19/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are higher in early U.S. trading. Bulls 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 neutral early today. Shorter-term support lies at the overnight low of 126.24.0 and then at this week’s low of 126.15.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 127.01.0 and then at 127.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded 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 to bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 96.40 and then at 96.595. Shorter-term support is seen at last week’s low of 95.890 and then at 95.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
July Nymex crude oil prices are lower in early U.S. trading. Bears are in near-term technical control. A price downtrend is in place on the daily chart. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is below 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 the overnight high of $53.05 and then at $54.00. Look for sell stops just below technical support at the overnight low of $51.46 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures prices were mixed to weaker overnight, with corn down 1 to 2 cents, soybeans off around 3 cents and wheat fractionally higher. The grain market traders are still digesting Tuesday’s USDA supply and demand report. That report was bullish for corn as the Agriculture Department significantly lower its U.S. corn production forecast. For soybeans, the USDA data was deemed bearish amid rising stockpiles and less demand for U.S. soybeans expected. The UDSA report was slightly friendly for U.S. wheat as the agency reduced soft red winter supplies a bit. It now looks like wheat and soybeans are looking to the corn market for direction. If corn continues to rally, wheat and soybeans are likely to follow, even though the supply and demand fundamentals for soybeans still favor the bears. There is a lot of the growing season left for corn and soybeans, and those crops are not off to great starts in the U.S. Midwest. And some parts of U.S. wheat country have received too much rain, which has cause some concerns about wheat quality in those areas. Focus now turns to weather in the U.S. Corn Belt and the late-June USDA planted acreage and quarterly stocks reports.
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