Thursday, June 6–Jim Wyckoff’s Morning Markets Report
European stock indexes were mostly firmer overnight, while Asian shares were mostly weaker. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. indexes are posting solid gains this week after hitting three-month lows on Monday.
There are hopes in the marketplace that the U.S. trade tariff threats against Mexico, set to go into effect soon, can be withdrawn as Mexican and U.S. officials are presently meeting to discuss more Mexican participation in curbing illegal immigrants from crossing the Mexican border into the U.S. Also, some Republican members of Congress are pushing back on President Trump’s use of trade tariffs to achieve his non-trade goals.
World government bond markets continue to see their yields drop amid very low inflation and worries about slowing global economic growth and the resulting easier monetary policies from the major central banks. The German 10-year bond yield dropped to minus 0.232% today.
In overnight news, the Euro zone reported its first-quarter GDP at up 0.4% from the fourth quarter and up 1.3%, year-on-year. Those numbers were right in line with market expectations but still very tepid.
The key “outside markets” today see the U.S. dollar index trading lower in early U.S. action. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been negated to suggest a market top is in place. Meantime, Nymex crude oil prices are near steady and trading around $51.50 a barrel after dropping to a nearly five-month low on Wednesday.
Traders are awaiting Friday morning’s employment situation report for May from the Labor Department—arguably the most important U.S. data point of the month. The non-farm jobs component of that report is forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number has many looking for a weaker number in Friday’s jobs report.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the international trade report, revised productivity and costs, and the monthly chain store sales index.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are higher on more short covering and bargain hunting after hitting a three-month low Monday. A five-week-old downtrend on the daily bar chart has been negated and bulls have quickly regained momentum. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-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 2,845.00 and then at 2,865.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,817.00 and then at 2,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher on more short covering and bargain hunting after hitting a three-month low on Monday. Prices are still in a five-week-old downtrend on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-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 7,300.00 and then at 7,350.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,209.75 and then at 7,150.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are higher in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at Wednesday’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 this week’s low of 153 3/32 and then at 152 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
September U.S. T-Notes: Prices are up in early U.S. trading. 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 bullish early today. Shorter-term support lies at this week’s low of 126.22.0 and then at 126.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 127.10.0 and then at the contract high of 127.15.0. 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 down in early U.S. trading. Bulls still have the overall near-term technical advantage but a months-old price uptrend on the daily chart has been negated 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 Wednesday’s high of 96.805 and then at 97.000. Shorter-term support is seen at 96.350 and then at this week’s low of 96.150. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly up 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 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 early today. Look for buy stops to reside just above technical resistance at $53.00 and then at $54.00. Look for sell stops just below technical support at this week’s low of $50.60 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were mixed overnight, with corn down just over 1 cent, soybeans off 6 to 7 cents and wheat up around 2 to 5 cents. The grain markets have seen choppier price action this week and have paused from the recent strong gains. This pause is not bearish, but the bulls need to step up and show some strength yet this week—especially in wheat. Corn Belt weather patterns have turned a bit drier than forecasters had expected, providing farmers a better opportunity to get their corn and soybeans planted. It’s important to remember that weather forecasts for the U.S. Midwest in the summertime can change quickly. This will likely keep the grain markets “edgy” for at least the near term. Even if the weather does turn drier, the heretofore record or near-record slow planting pace for U.S. corn and soybeans is likely to reduce production totals come this fall. Traders will closely examine this morning’s weekly USDA export sales report, including any new sales of grain to China. Grain traders are somewhat assuaged by the talks taking place between the U.S. and Mexico to avoid the U.S. slapping tariffs on Mexico.
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