Monday, June 1–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Civil unrest over racial inequality that exploded in U.S. cities during the weekend has dealt another major blow to the world’s largest economy. Reports said President Trump Friday night had to take cover in a bunker at the White House due to unruly crowds gathered at the White House. With the U.S. dealing with its own civil problems, it seems even less likely mainland China will loosen its tightening grip on Hong Kong.
The protesting and rioting in major U.S. cities has called into question the timing of continued reopening of businesses that have been closed for two months due to the Covid-19 pandemic. The protesting crowds in the U.S. also prompted heightened concerns about a second wave of infections hitting in in the coming weeks. All of the above have cast a pall over traders and investors, who had been driving stock market prices higher on hopes the pandemic had peaked. Yet, U.S. stock indexes are only slightly lower heading into the New York opening.
In other news, reports Monday said China has halted its purchase of U.S. soybeans and some other U.S. ag products, in a signal that nation will no longer honor its “Phase 1” trade agreement reached with the U.S. in January. This follows the move by Trump on Friday afternoon to rescind Hong Kong’s more favorable trade status with the U.S.
China’s Caixin manufacturing purchasing managers index (PMI) came in at 50.7 in May versus 49.4 in April, and 49.6 forecast. China’s official manufacturing PMI was 50.6 in May compared to 50.8 in April and 51.1 forecast. The Euro zone May manufacturing PMI was reported at 39.4, which was in line with market expectations.
President Trump on Saturday said he will likely postpone the Group of Seven meeting that had been scheduled for mid-June in the U.S. He said he wants to add additional countries to the confab and said the current G-7 “does not represent what is going on in the world.”
The important outside markets see the U.S. dollar index lower early today and hitting a 2.5-month low overnight. Nymex crude oil prices are weaker and trading around $35.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.66%.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, construction spending, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading, on a mild pullback from recent gains. Bulls still 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at last week’s high of 3,055.75 and then at 3,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,999.00 and then at 2,975.00. Wyckoff’s Intra-day Market Rating: 4.5
September Nasdaq index futures: Prices are weaker in early U.S. trading. A price uptrend is still firmly in place on the daily chart. 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 to bearish early today. Shorter-term technical resistance is seen at last week’s high of 9,587.50 and then at 9,700,00. On the downside, shorter-term support is seen at the overnight low of 9,437.25 and then at 9,300.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls have the overall technical advantage but trading has been sideways and choppy at higher levels for weeks. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 178 26/32 and then at 179 even. Shorter-term support lies at Friday’s low of 177 10/32 and then at last week’s low of 176 19/32. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are slightly lower in early U.S. trading. Bulls have the solid overall near-term technical advantage but trading has been choppy and sideways at higher levels for weeks. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 139.07.5 and then at the May high of 139.13.5. Shorter-term technical support lies at the overnight low of 138.28.5 and then at 138.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is modestly lower and hit a 2.5-month low in early U.S. trading. Bears have downside momentum. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Friday’s high of 98.560 and then at 99.000. Shorter-term support is seen at the overnight low of 97.900 and then at 97.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly lower in early U.S. trading after hitting an 11-week high overnight. A price uptrend remains in place on the daily bar chart and the bulls still have upside momentum. The shorter-term moving averages are still bullish early today as the 4-day is above the 9-day and 18-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 the overnight high of $35.90 and then at $37.00. Look for sell stops just below technical support at $35.00 and then at $34.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are weaker in early U.S. pre-market trading. Focus today is on the deteriorating U.S.-China relations that are likely to reduce China’s purchases of U.S. ag products. Bulls need a weather market in the U.S. Midwest to develop. But so far very good early-season planting and growing weather has been seen for the U.S. corn, soybean and wheat crops.
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