Friday, May 10–Jim Wyckoff’s Morning Markets Report
World stock markets were mostly up overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
There was no eleventh-hour trade agreement reached between the U.S. and China late Thursday. Increased U.S. tariffs on imported Chinese goods went into effect at midnight last night. China has vowed retaliation. Interestingly, China’s stock market posted a solid rally Friday after this news. It could be a classic case of “sell the rumor, buy the fact” regarding the matter. The U.S.-China trade talks will continue in Washington today. It could also be that the Asian stock market rally Friday was due in part to optimism a deal can be reached soon, as the two sides are still talking. Also, President Trump said China President Xi sent him a “beautiful letter” this week and that the two may talk soon on the matter.
Focus in early U.S. trading today will be on the U.S. consumer price index report for April, which is expected to come in at up 0.4% from March and up 2.1%, year-on-year. A theme in the world marketplace in recent months has been very tame inflation coming out of the major economies.
The U.S.-China trade conflict has this week mostly overshadowed another potential geopolitical flashpoint. Iran’s government said this week it will stop complying with some commitments it made in the United Nations nuclear deal in 2015. The U.S. has a naval task force steaming to the Persian Gulf, including an aircraft carrier, due to what the U.S. says are threats against the U.S. in the region.
The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are firmer and trading just below $62.00 a barrel.
Other U.S. economic data due for release Friday includes real earnings, and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading 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 and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,889.00 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 2,852.50 and then at this week’s low of 2,836.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading 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 and 18-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 the overnight high of 7,654.50 and then at 7,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,532.50 and then at 7,500.00. 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 near steady in early U.S. trading. Bulls have the firm 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 early today. Shorter-term technical resistance is seen at this week’s high of 149 6/32 and then at 149 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 148 16/32 and then at 148 4/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls have the firm 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 123.27.0 and then at this week’s low of 123.18.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 124.08.5 and then at 124.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is slightly lower early today. Bulls have the firm overall near-term technical advantage. 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 even with 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 97.245 and then at this week’s high of 97.510. Shorter-term support is seen at this week’s low of 97.010 and then at 96.870. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
June Nymex crude oil prices are firmer in early U.S. trading. Bulls have faded recently to suggest a market top is in place. 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 this week’s high of $62.95 and then at $64.00. Look for sell stops just below technical support at $61.00 and then at this week’s low of $60.04. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were mixed overnight. Grain market bears have the solid overall near-term technical advantage. Focus is still on U.S.-China trade discussions that are still occurring despite the U.S. slapping new tariffs on China. Traders are awaiting this morning’s monthly USDA supply and demand report. Weather in the U.S. Corn Belt will be drier for several days, to allow planting progress to occur.
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