Monday, May 20–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S.-China trade war drags on, with any agreement between the two largest economies in the world not seen imminent. This matter will likely continue to be a drag on world stock markets until it’s come to a successful conclusion.
Markets are not reacting much to a threatening tweet President Trump made to Iran over the weekend. Trump warned Iran not to threaten the U.S. or it could mean an end to Iran as a country. A U.S. naval task force has been deployed to the Persian Gulf recently.
In overnight news, the German Bundesbank reported it expects Germany’s economy to stagnate in the second quarter of this year. Germany’s economy is the workhorse of the European Union.
In other news, Australia’s conservative government got a surprising victory in weekend national elections. And India’s Prime Minister Modi has likely won re-election over the weekend, according to exit polls.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are also trading around unchanged and just below $63.00 a barrel.
U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,876.50 and then at last week’s high of 2,894.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,840.00 and then at 2,820.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are lower in early U.S. 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 below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 7,500.00 and then at the overnight high of 7,559.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,400.00 and then at 7,350.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Prices are still within easy striking distance of the contract high scored in March. 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- and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 159 even and then at last week’s high of 150 10/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 149 10/32 and then at 149 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are steady in early U.S. trading and not far from the March 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at the overnight low of 124.09.0 and then at 124.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 124.20.0 and then at last week’s high of 124.27.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The June U.S. dollar index is near steady firmer and hit a three-week high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above 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 bullish early today. The dollar index finds shorter-term technical resistance at the contract high of 98.085 and then at 98.250. Shorter-term support is seen at Friday’s low of 97.590 and then at 97.265. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
June Nymex crude oil prices are slightly higher and hit a two-week high in early U.S. trading. Bulls have some upside momentum. The shorter-term moving averages are neutral early today as the 4-day is above the 9-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 $63.81 and then at $64.00. Look for sell stops just below technical support at $62.50 and then at $62.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were solidly higher overnight, with corn and wheat scoring multi-week high. A combination of short covering from big speculative funds who had record short positions up until recently, and bargain hunting are lifting the grains. Focus is on wet weather in the Corn Belt (and more on the way) that has very seriously slowed corn and soybean planting progress—to the point that yields will be impacted negatively. Focus today will be on the weekly USDA export inspections report in the morning and the weekly USDA crop progress reports in the afternoon. The U.S. corn planting pace for this time of year could be the slowest on record.
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