Thursday, June 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Risk aversion has returned to the marketplace following a wake-up call delivered by the Federal Reserve following its two-day FOMC meeting Wednesday afternoon. The Fed made no changes in U.S. monetary policy but leaned dovish, saying the U.S. economy could take years to fully recover from its recent damage inflicted by the Covid-19 pandemic. The central bank also painted a bleak picture of the present state of the U.S. economy, including forecasting U.S. GDP at minus 6.5% this year and unemployment above 9% by the end of the year. Those numbers were not a shock to the marketplace, but a grim reminder to traders and investors who had just pushed the Nasdaq stock index to a new record high Wednesday morning and the S&P 500 to a three-month high Monday.
Said one market analyst in an email dispatch Thursday morning: “The Fed is now committed to keeping interest rates near zero until at least the end of 2022 and using all its tools to support the economy. This could translate into further speculative bets and push the rally in equities and corporate debt higher. However, without real economic recovery the market will have to deal with a more significant challenge, which is debt insolvency. That’s why the disconnect between asset performance and economic fundamentals cannot run forever and investors will need to become more rational with their investment approach.”
There are also growing worries in the global marketplace about a “second wave” of the Covid-19 pandemic hitting many countries. There is some evidence such may be occurring in some regions of some countries, including the U.S.
The important outside markets see the U.S. dollar index firmer on a bounce after hitting a three-month low Wednesday. The greenback is in a serious swoon. Meantime, Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high above $40.00 Monday, and are trading around $38.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around the 0.7% level. Gold is solidly up Thursday morning and bulls are having a good week as safe-haven demand has returned to the marketplace.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the producer price index. Jobless claims in the latest reporting week are seen up 1.6 million.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading. Bulls still have the overall near-term technical advantage amid a price uptrend in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,177.75 and then at this week’s high of 3,220.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,100.00 and then at 3,075.00. Wyckoff’s Intra-day Market Rating: 3.5
September Nasdaq index futures: Prices are solidly lower after hitting another record high on Wednesday. A price uptrend is still firmly in place on the daily chart. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 10,000.00 and then at the overnight high of 10,091.25. On the downside, shorter-term support is seen at 9,900.00 and then at 9,796.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are solidly up again in early U.S. trading, as bulls are having a very good week after recent strong losses. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 177 12/32 and then at 178 even. Shorter-term support lies at the overnight low of 176 4/32 and then at 175 even. Wyckoff’s Intra-Day Market Rating: 6.5
September U.S. T-Notes: Prices are higher in early U.S. trading and 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 even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 138.29.0 and then at 139.00.0. Shorter-term technical support lies at the overnight low of 138.19.5 and then at 138.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The September U.S. dollar index is firmer on a corrective bounce after hitting a three-month low Wednesday. Bulls are still in big trouble. 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 96.480 and then at this week’s high of 97.035. Shorter-term support is seen at this week’s low of 95.570 and then at 95.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are lower on a corrective pullback after hitting a three-month high on Monday. A price uptrend is still in place on the daily bar chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $39.09 and then at $40.00. Look for sell stops just below technical support at this week’s low of $37.07 and then at $36.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are steady to weaker in early U.S. pre-market trading. It’s a big data day for the grains, as weekly USDA export sales are out, as well as the monthly USDA supply and demand report. Bulls are fading this week, especially in corn. 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. Prices will grind mostly sideways until then.
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