Thursday, May 29–Jim Wyckoff’s Morning Markets Report
European stock markets were mostly up overnight on corrective bounces from recent selling pressure. Asian stocks were mostly down, on continued worries about slowing global economic growth amid the U.S.-China trade war that shows no sign of ending any time soon. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, after hitting 2.5-month lows on Wednesday.
Escalating rhetoric from the U.S. and China suggest diminishing chances the world’s two largest economies will reach any trade agreement before the G-20 meeting in Japan on June 28-29.
The key U.S. economic data point so far this week comes with this morning’s second estimate of first-quarter gross domestic product. GDP is expected to grow 3.0%, year-on-year, versus the last reading of up 3.2%.
The key “outside markets” today see the U.S. dollar index trading near steady following good gains so far this week that have the index trading near its recent two-year high. Meantime, Nymex crude oil prices are slightly higher and trading around $59.00 a barrel. Oil hit a three-month low Wednesday and prices are trending lower on the daily chart.
Other U.S. economic data due for release Thursday include the weekly jobless claims report, preliminary corporate profits, pending home sales, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
September S&P 500 e-mini futures: Prices are firmer on a corrective bounce after hitting a 2.5-month low on Wednesday. Prices are in a four-week-old downtrend on the daily bar chart to suggest a market top is in place. 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 early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 2,810.25 and then at this week’s high of 2,845.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,770.25 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
September Nasdaq index futures: Prices are higher on a bounce after hitting a 2.5-month low on Wednesday. Prices are in a four-week-old downtrend to suggest a market top is in place. 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 Wednesday’s high of 7,319.25 and then at this week’s high of 7,398.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,209.25 and then at 7,200.00. 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 weaker on some profit taking from recent good gains that saw prices hit a contract high on Wednesday. Bulls have the solid overall near-term technical advantage, to suggest more upside. 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 bullish early today. Shorter-term technical resistance is seen at the 152 even and then at the contract high of 152 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 151 12/32 and then at 151 even. 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 Wednesday. 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 the overnight low of 125.16.0 and then at 125.12.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 125.25.0 and then at 126.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The September U.S. dollar index is near steady in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day. The 9-day is above 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 this week’s high of 97.520 and then at the contract high of 97.715. Shorter-term support is seen at Wednesday’s low of 97.235 and then at this week’s low of 97.065. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
July Nymex crude oil prices are slightly up in early U.S. trading. Prices Wednesday hit a 2.5-month low. 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $59.70 and then at $60.00. Look for sell stops just below technical support at $58.00 and then at $57.33. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures prices were firmer in choppy overnight trading. The markets are pausing after corn hit a nearly 12-month high and wheat a three-month high Wednesday. Soybeans hit a five-week high. It’s still a major weather market in the grains, amid very soggy U.S. Midwest weather. There is more rain in the forecast in the next week, but it’s more scattered in nature. Still, corn and soybean seeding are at their slowest paces in recent history. In wheat, prices are supported by declining U.S. winter wheat crop conditions. Many veteran grain traders sense all the bullish weather news has now been factored into futures prices, which means more pausing action is likely for prices—unless weather conditions get markedly worse for the U.S. Corn Belt in the coming days. Presently, grain traders are ignoring the bearish elements of the potential for slowing global economic growth and the U.S.-China trade war that sees no end in sight. Reports today said China has stopped buying U.S. soybeans altogether. The weekly USDA export sales report, normally due out on Thursday mornings, has been delayed until Friday morning due to the U.S. holiday on Monday.
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