Thursday, May 16–Jim Wyckoff’s Morning Markets Report
World stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Following Monday’s downdraft that pushed the U.S. stock indexes to six-week lows, the indexes have made solid recoveries.
There are two markets features this week: rising government bond yields due to concerns about slowing world economic growth. The U.S.-China trade war is mostly to blame for those worries. The second feature is a solid rebound in grain futures prices. That’s mostly due to big speculative funds covering their short futures positions.
On the U.S.-China trade war front, President Trump on Wednesday signed an executive order that essentially bans some U.S. telecommunications equipment from Chinese companies.
A U.S.-China trade theme continues in the world marketplace: one day the two sides are upbeat on a deal getting done; the next day their tone is sour. Such will keep the markets very uncertain on the matter.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are firmer and trading around $62.50 a barrel.
U.S. economic data due for release today includes the weekly jobless claims report, the Philadelphia Fed business survey, and new residential construction.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have made a good rebound this week. The shorter-term moving averages (4-, 9- and 18-day) are still 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. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 2,880.00 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,840.50 and then at 2,820.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have made a good rebound this week. Shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below 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 7,600.00 and then at 7,654.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,473.50 and then at 7,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady and hit another six-week high overnight. Prices are within easy striking distance of the contract high scored in March. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9- and 18-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 the overnight high of 150 10/32 and then at the contract high of 150 21/32. Buy stops likely reside just above those levels. Shorter-term support lies at Wednesday’s low of 149 6/32 and then at 149 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are weaker in early U.S. trading, on some profit taking from recent gains. Prices are close to the March contract high. Bulls have the solid overall near-term technical advantage. 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 support lies at Wednesday’s low of 124.10.0 and then at 124.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 124.27.0 and then at the contract high of 124.31.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The June U.S. dollar index is near steady early today. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.515 and then at 97.865. Shorter-term support is seen at 97.240 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher in early U.S. trading. Bulls have faded recently to suggest a market top is in place. 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 bullish early today. Look for buy stops to reside just above technical resistance at $63.00 and then at this week’s high of $63.33. Look for sell stops just below technical support at $62.00 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were solidly higher overnight on more heavy short covering and bargain hunting. Grain market bulls are coming to life bigtime this week, to suggest market bottoms are in place and that prices could start to trend up. Weekly closes Friday that are at or near the weekly highs would be a better clue price uptrends can be sustained. It appears grain traders have factored into prices all the bearish U.S.-China trade news, and are now focused on wet weather in the Corn Belt (and more on the way) that has seriously slowed corn and soybean planting progress—to the point that yields will be impacted negatively. Traders will also closely examine this morning’s weekly USDA export sales report.
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