Wednesday, April 3–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were firmer overnight. U.S. stock indexes are pointed toward higher openings and at 5.5-month highs when the New York day session begins.
So far this week, traders and investors have elevated risk appetites to boost world stock markets, due in part to optimism the U.S. and China will soon reach a trade deal. Talks on the matter take place in Washington, D.C. beginning today.
The key U.S. data point of the day is the ADP national employment report for March. The payrolls number is forecast to be up 173,000. This number is a precursor to the more important jobs report from the Labor Department that is due out Friday morning. The non-farm payrolls number in that report is forecast to be up 175,000 in March, with the unemployment rate expected to remain at 3.8%.
In overnight news, the Euro zone’s Markit composite purchasing managers’ index (PMI) showed a reading of 51.6 in March from 51.9 in February.
On the Brexit front, U.K.’s Parliament and Prime Minister Theresa May cannot come to agreement on a “soft” exit, with May wanting to extend the deadline for a “hard” exit.
The key outside markets today see the U.S. dollar index lower on a corrective pullback from recent gains. Meantime, Nymex crude oil prices are slightly higher, hit another 4.5-month high and are trading around $62.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are up and hit a 5.5-month high in early U.S. trading today. Bulls 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 bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 2,900.00 and then at 2,915.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,865.25 and then at this week’s low of 2,844.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
June Nasdaq index futures: Prices are higher and hit a 5.5-month high 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 bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 7,600.00 and then at 7,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,513.25 and then at 7,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower early today on more profit taking. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 148 even and then at the overnight high of 148 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 147 14/32 and then at 147 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower in early U.S. trading, on profit taking. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 123.20.0 and then at the overnight high of 123.27.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.13.0 and then at 123.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is lower in early U.S. trading, on a corrective pullback from recent gains. 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.890 and then at this week’s high of 97.095. Shorter-term support is seen at the overnight low of 96.525 and then at 96.250. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
May Nymex crude oil prices are slightly higher and hit another 4.5-month high in early U.S. trading. Bulls have the firm near-term technical advantage and are keeping a gentle uptrend in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $63.00 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 were firmer overnight on short covering. Bears still have the overall near-term technical advantage in the grains. The bulls are trying to stabilize prices. It’s very likely going to take a weather market in the Corn Belt in the coming few months to jumpstart any rallies in the grain markets.
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