Friday, June 12–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading, with Asian stocks mostly down and European stocks mostly up. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, but the overnight gains are only about one-third of Thursday’s very sharp losses. Risk aversion has returned to the marketplace late this week, on a surge in Covid-19 cases in some major global economies after they started to reopen businesses, which in turn increased human interaction. It could be that the rise is due to more testing that is prompting more cases to be reported. Traders and investors also got a reminder from the Federal Reserve this week of just how bad is the U.S. and global economic situation at present, and the tough road ahead. President Trump on Thursday criticized the Fed for being too dour in its predictions.
U.S. Treasury Secretary Mnuchin on Thursday said the government is mulling a second round of cash payments to American taxpayers who qualify.
In overnight news, the U.K. reported its economy contracted by 20.4% in April. Meantime, Euro zone industrial output for April was reported down 17.1% from March and down 28% year-on-year—for the largest drop ever recorded.
The important outside markets early today see the U.S. dollar index slightly weaker. The greenback is in a steep downtrend and the USDX hit a three-month low this week. Meantime, Nymex crude oil prices are slightly up and trading around $36.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.7% level.
U.S. economic data due for release Friday includes import and export prices and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly higher in early U.S. trading, on a rebound from Thursday’s strong losses. Bulls still have the overall near-term technical advantage but a price uptrend in place on the daily bar chart is in jeopardy. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 3,075.00 and then at 3,100.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,000.00 and then at Thursday’s low of 2,985.25. Wyckoff’s Intra-day Market Rating: 6.5
September Nasdaq index futures: Prices are solidly higher on a corrective bounce after Thursday’s big losses that came after prices hit a record high on Wednesday. A price uptrend is still in place on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are still 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 early today. Shorter-term technical resistance is seen at 9,800.00 and then at 9,900.00. On the downside, shorter-term support is seen at 9,650.00 and then at this week’s low of 9,572.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly down in early U.S. trading and have given back much of Thursday’s strong gains. Still, bulls are having a very good week. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 178 even and then at this week’s high of 178 13/32. Shorter-term support lies at the overnight low of 176 22/32 and then at Thursday’s low of 176 4/32. Wyckoff’s Intra-Day Market Rating: 4.0
September U.S. T-Notes: Prices are lower in early U.S. trading but bulls are still having a very good week. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 138.31.0 and then at this week’s high of 139.03.0. Shorter-term technical support lies at the overnight low of 138.18.0 and then at 138.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly firmer on a corrective bounce after hitting a three-month low Wednesday. 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.945 and then at this week’s high of 97.035. Shorter-term support is seen at the overnight low of 96.485 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are near steady in early U.S. trading, following strong losses on Thursday that have put a price uptrend on the daily bar chart in some jeopardy. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $37.00 and then at $38.00. Look for sell stops just below technical support at $35.00 and then at the overnight low of $34.48. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The bulls have shown some resilience in corn and beans this week, while the wheat bulls continue to fade. This suggests all three markets will trade sideways and choppy in the near term. Weather in the U.S. Midwest is bearish and crop conditions are good, to limit buying interest at present. Bulls need a weather market in the U.S. Midwest to develop. More years than not, one does develop in the summer, to some degree.
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