Thursday, May 23–Jim Wyckoff’s morning markets report
The marketplace has quickly digested Wednesday afternoon’s FOMC minutes from the last meeting. The minutes leaned just a bit more hawkish than the marketplace expected. While the markets expected a “higher for longer” U.S. interest rate theme from the minutes, what the markets did not expect was that several FOMC members indicated they were willing to raise interest rates should inflation risks accelerate. The U.S. stock indexes saw selling pressure after the minutes were released and U.S. Treasury yields up-ticked a bit.
In overnight news, the Eurozone got some upbeat manufacturing and services purchasing managers indexes (PMI)for April, as both beat market expectations. However, the manufacturing PMI reading was 47.4, which is still well below the 50.0 reading that suggests the sector is still in contraction.
A Barrons story today has a headline that reads: “Commodities are hot….” The story says “Commodities are having their moment. Gold and copper have hit historic highs while agriculture is knocking on the door to join the party.” The story continues, saying “bottom line, the commodity bull market is alive and well and has more upside.”
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are firmer and trading around $78.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is fetching 4.43%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the U.S. flash manufacturing and services purchasing managers indexes (PMIs), new residential sales and the Kansas City Fed business survey.
STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher and hit a contract and record high. The shorter-term moving averages (4-day, 9-day and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at 5,375.00 and then at 5,400.00. Support for active traders is seen at the overnight low of 5,334.00 and then at this week’s low of 5,306.75. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are solidly up in early U.S. trading and hit another contract and record high overnight. 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 is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 19,000.00 and then at 19,100.00. On the downside, shorter-term support is seen at the overnight low of 18,843.25 and then at this week’s low of 18,633.00. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer in early U.S. trading. 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 to bearish early today. Shorter-term technical resistance is seen at this week’s high of 117 19/32 and then at 118 even. Shorter-term support lies at this week’s low of 116 24/32 and then at 116 even. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 resistance lies at this week’s high of 109.10.5 and then at 109.18.5. Shorter-term technical support is seen at this week’s low of 108.28.5 and then at 108.20.0. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The June Euro currency futures are higher in early U.S. trading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at Wednesday’s high of 1.0876 and then at the May high of 1.0909. Shorter-term support is seen at the overnight low of 1.0823 and then at 1.0800. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are firmer in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $79.72 and then at this week’s high of $80.60. Look for sell stops just below technical support at the May low of $76.70 and then at $76.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were firmer overnight. On tap today is the weekly USDA export sales report. Corn has seen its price uptrend stall out. HRW and SRW wheat, soybeans and soybean meal are still trending higher on the daily bar charts. Weather in the U.S. grain regions is presently leaning slightly bullish.
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