Thursday, March 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight, following the big gains in the U.S. stock market on Wednesday. However, U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. Look for another active day in U.S. markets.
The U.S. stock market euphoria over Democratic U.S. presidential candidate Joe Biden’s solid performance at the “Super Tuesday” primaries has quickly faded Thursday as focus again turns to the uncertainty regarding the Covid-19, or coronavirus, outbreak that continues to spread worldwide and especially outside of China. This week, major corporations have suspended air travel for their employees and cancelled some conventions and conferences. There are reports of some U.S. stores running out of basic consumer goods. On the economic front several major central banks this week have eased their monetary policies to combat the negative economic consequences of the Covid-19 outbreak. More central banks are likely to take action soon, including the European Central Bank.
Recent history shows that some days traders and investors are less concerned about the coronavirus outbreak, and then the next day they are more concerned. Look for continued vacillating markets as the Covid-19 situation plays out. It’s now looking more likely that the event will not be a short-term situation, but instead one that will play out over several months, or longer.
The benchmark U.S. 10-year Treasury note yield earlier this week fell below 1.0% to a record low, and remains below that level. This has prompted keen concern among long-term market watchers that a U.S. and /or global economic recession looms, including the prospect of debilitating consumer and commercial price deflation.
All of the above are bearish for stocks and most commodities, and bullish for safe-haven assets like gold, the U.S. dollar and U.S. Treasuries. An examination of a chart of the Goldman Sachs Commodity index paints a dour picture for the prospects for the raw commodity sector.
The key outside markets today see Nymex crude oil prices firmer and trading around $47.00 a barrel in early trading. Reports said the OPEC oil cartel is close to agreement on a collective oil-production cut to try to stem the slide in oil prices. The U.S. dollar index is trading down today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, revised productivity and costs, manufacturers’ shipments and inventories, and monthly retail chain store sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly down in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy and volatile trading. 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 neutral early today. Today, shorter-term technical resistance comes in at 3,100.00 and then at this week’s high of 3,131.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,000.00 and then at Wednesday’s low of 3,269.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 3.0
June Nasdaq index futures: Prices are solidly down in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid choppy and volatile trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 8,880.00 and then at this week’s high of 9,006.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,700.00 and then at 8,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are firmer and not far below this week’s contract high 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 173 16/32 and then at 174 even. Buy stops likely reside just above those levels. Shorter-term support lies at 172 even and then at 171 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher in early U.S. trading and not far below this week’s 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 136.09.5 and then at the contract high of 136.23.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 135.24.0 and then at the overnight low of 135.12.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is lower in early U.S. trading Thursday. Bears have the near-term technical advantage. 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.120 and then at 97.375. Shorter-term support is seen at this week’s low of 96.635 and then at 96.500. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
April Nymex crude oil prices are near steady in early U.S. trading. Bears are still in firm near-term technical control. 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 this week’s high of $48.66 and then at $49.00. Look for sell stops just below technical support at the overnight low of $46.32 and then at $46.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed to weaker in early US pre-market trading Thursday. Corn is 2 to 3 cents down, soybeans around 2 cents lower, and wheat near steady. Expected sharply lower U.S. stock market trade at the opening will squelch the grain market bulls. Grain traders will continue to look to the stock and financial markets for direction. Today’s important event for the grain markets will be the 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