Thursday, March 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward weaker slightly higher openings when the New York day session begins.
There was more dour economic news coming out of the European Union Thursday, as Euro zone factory export orders fell to a two-year low. The European Commission’s Economic Sentiment indicator—a combination of business and consumer sentiment–fell to 105.5 in March from 106.2 in February, for the lowest reading in 2.5 years.
On the Brexit front, the U.K. Parliament late Wednesday rejected all eight options offered by Prime Minister Theresa May to break the Brexit deadlock. May’s options moving forward on the matter are increasingly limited, with speculation of a general election being held in the near future.
The U.S. and China are holding high-level trade talks that are taking place in Beijing. The key figures were meeting for dinner Thursday evening. There is no clear consensus on the eventual outcome of the U.S.-China trade talks, which means the final result could cause volatility in markets.
The U.S. economic data point of the day is the third reading on fourth-quarter gross domestic product. GDP is seen up 2.2% versus the last 4Q estimate of up 2.6%.
The key outside markets today see the U.S. dollar index higher. Meantime, Nymex crude oil prices are weaker and trading just above $59.00 a barrel.
U.S. economic reports due for release Thursday includes the weekly jobless claims report, the third estimate of four-quarter gross domestic product, the Kansas City Fed manufacturing survey, and pending home sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are near steady in early U.S. trading. Bulls still have the firm near-term technical advantage amid a price uptrend on the daily chart. 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 to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,835.00 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,789.50 and then at this week’s low of 2,775.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
June Nasdaq index futures: Prices are near steady in early U.S. trading. Bulls have the firm overall near-term technical advantage amid a price uptrend. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 7,350.00 and then at Wednesday’s high of 7,404.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,276.00 and then at 7,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are steady and hit another contract high in early U.S. trading today. 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight contract high of 150 21/32 and then at 151 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 149 27/32 and then at 149 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are weaker in early U.S. trading. Prices Wednesday hit a contract high. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the contract high of 124.31.0 and then at 125.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.16.0 and then at Wednesday’s low of 124.08.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher and hit a 2.5-week high overnight. 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 bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.590 and then at 96.685. Shorter-term support is seen at Wednesday’s low of 96.190 and then at this week’ low of 95.895. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
May Nymex crude oil prices are weaker in early U.S. trading, on more profit taking. The shorter-term moving averages are neutral early today as the 4-day is below the 9-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 $59.43 and then at $60.00. Look for sell stops just below technical support at this week’s low of $58.33 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were mixed overnight. Traders will closely examine this morning’s weekly USDA export sales report, especially to see if China has made any purchases. Grain market bears have the overall near-term technical advantage. Flooding and wet fields in the Corn Belt have traders wondering about the acreage mix in the region. Friday sees some of the most important USDA reports of the year—the U.S. planting intentions and quarterly grain stocks reports.
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