Friday, June 7–Jim Wyckoff’s Morning Markets Report
European and Asian stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted solid gains this week and have regained bullish technical momentum after hitting three-month lows on Monday.
Traders are anxiously 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. A downbeat jobs report today would probably significantly raise the odds of the Federal Reserve cutting U.S. interest rates sooner rather than later—and possibly this month. Look for more active trading in many markets in the immediate aftermath of the jobs report today.
In overnight news, the German central bank said German economic growth this year will only be 0.6% compared to 1.5% seen in 2018. Germany is the workhorse of the Euro zone economy. The European Central Bank on Thursday leaned more dovish and suggested it could further ease its monetary policy soon.
The key “outside markets” today see the U.S. dollar index trading slightly up 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 firmer and trading around $53.00 a barrel after dropping to a nearly five-month low on Wednesday.
Other U.S. economic data due for release Friday includes monthly wholesale trade and consumer credit.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have regained upside momentum late this week. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 2,875.00 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,842.00 and then at 2,817.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
September Nasdaq index futures: Prices are higher in early U.S. trading. Prices are still in a five-week-old downtrend on the daily chart, but just barely now. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 7,400.00 and then at 7,450.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,342.00 and then at 7,300.00. 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 slightly 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 bearish early today. Shorter-term technical resistance is seen at 154 even and then at 154 10/32. 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: 5.5
September U.S. T-Notes: Prices are near steady 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 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 127.00.0 and then at 127.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage but faded badly this week as a months-old price uptrend on the daily chart was 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 early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 96.925 and then at this week’s high of 97.175. Shorter-term support is seen at this week’s low of 96.150 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are firmer in early U.S. trading. Bears are still 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 to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.83 and then at this week’s high of $54.63. Look for sell stops just below technical support at $52.50 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures prices were lower overnight, with corn down around 4 cents, soybeans off 5 to 6 cents and wheat down around 5 to 7 cents. The grain markets have seen choppier price action this week. U.S. Corn Belt weather patterns have turned drier for the next few days, which will allow farmers to really pick up the pace of planting corn and soybeans, before some more wet weather for the region returns by later next week. Even as the weather turns drier, the record or near-record slow planting pace for U.S. corn and soybeans is likely to reduce production totals this fall. And traders do not want to go home too exposed on the short side of the grain markets on Friday because summertime weather forecasts can and do change quickly. Traders are awaiting next week’s latest crop progress reports (Monday) and the monthly USDA supply and demand report (Tuesday) that will update U.S. and world grain balance sheets. Grain traders are still watching the trade talks taking place between the U.S. and Mexico, and the U.S. and China, but no significant, markets-moving news has occurred on those fronts.
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