Tuesday, June 4–Jim Wyckoff’s Morning Markets Report
European equities were mostly firmer overnight and Asian stock markets were mostly down. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes hit three-month lows Monday and are trending down on the daily charts.
Australia’s central bank cut its main interest rate overnight to a record low of 1.25% from 1.50%. It was the first rate cut in nearly three years. The central bank said it made the move due to worries about global trade wars reducing world economic activity. In recent weeks the marketplace is placing much higher odds on the U.S. Federal Reserve lowering interest rates, possibly as soon as this summer. The European Central Bank is also seen as likely easing its monetary policy as soon as this summer.
The notions of easier money coming from the world’s major central banks has boosted gold prices and dropped government bond yields. Notions of lower interest rates are a mixed bag for the global stock markets—a positive due to more financial market liquidity but a negative because the rates would be coming down due to slowing economic growth prospects.
In other overnight news, the Euro zone reported its May consumer price index at up 1.2%, year-on-year, versus up 1.7% in April. The April reading was the lowest in over a year.
The key “outside markets” today see the U.S. dollar index trading slightly up after absorbing solid losses Monday. The greenback bulls have faded recently and the near-term price uptrend for the USDX is in jeopardy. Meantime, Nymex crude oil prices are lower and trading just below $53.00 a barrel after dropping to a nearly five-month low on Monday.
U.S. economic data due for release Tuesday includes the weekly Johnson Rebook and Goldman Sachs retail sales reports, the ISM New York report on business, manufacturers’ shipments and inventories, and a World Bank global economic report. Several Federal Reserve officials also speak today.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer on short covering after hitting a three-month low Monday. Prices are in a five-week-old downtrend on the daily bar chart to suggest more pressure coming. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at 2,780.00 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,747.00 and then at Monday’s low of 2,732.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are firmer on short covering after hitting a three-month low on Monday. Prices are in a five-week-old downtrend to suggest more pressure. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 7,100.00 and then at Monday’s high of 7,157.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,005.75 and then at Monday’s low of 6,969.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
September U.S. T-Bonds: Prices are lower on profit taking after hitting a contract high Monday. Bulls still 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 technical resistance is seen at the contract high of 155 1/32 and then at 155 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 154 even and then at Monday’s low of 153 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
September U.S. T-Notes: Prices are lower on profit taking after hitting a contract high Monday. Bulls still 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 126.31.5 and then at Monday’s low of 126.23.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 127.10.0 and then at Monday’s contract high of 127.15.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is weaker and hit a three-week low in early U.S. trading. Bulls still have the firm overall near-term technical advantage but are fading and need to show fresh power soon. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above 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 96.665 and then at 97.000. Shorter-term support is seen at the overnight low of 96.395 and then at 96.300. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
July Nymex crude oil prices are lower after hitting a nearly five-month low Monday. Bears are 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 bearish early today. Look for buy stops to reside just above technical resistance at $53.00 and then at $54.00. Look for sell stops just below technical support at Monday’s low of $52.11 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures prices were mixed overnight. Corn and soybeans were solidly up, while wheat futures were down on a correction from Monday’s good gains. The U.S. Agriculture Department on Monday afternoon said U.S. corn and soybean planting were still way behind the average pace for this time of year. Corn planting progress was less than expected at 67% (71% forecast) and compares to a rate of 58% complete last week and 97% at this time last year and 97% for the five-year average. U.S. soybean planting progress was pegged at 39% this week (42% was expected) and a pace of 29% last week, 87% at this time last year and 75% for the five-year average. Hard red spring wheat planting progress was at 93% done, which was as expected and compares to 84% last week, 97% last year and 97% for the five-year average. Weather forecasts for the Corn Belt are a mixed bag, with some areas seen drier in the coming days and others receiving scattered rains, with some heavy rains. All kinds of trader uncertainties revolve around the U.S. corn, soybean planted acres mix and how many farmers will take an insurance option of “prevent-plant.” What is known is that the crops that do get planted now will be well behind in maturity as the growing season progresses. That means likely lower yields come autumn. The U.S.-Mexico, U.S.-China trade tensions are giving the grain market bulls some pause, but U.S. weather remains paramount in grain traders’ minds.
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