Wednesday, May 23–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins.
The world’s traders and investors are not so upbeat today, following comments from U.S. President Donald Trump on Tuesday that suggested the U.S. and China are still far apart on a trade dispute resolution. Also, the NAFTA trade talks between the U.S., Mexico and Canada have broken down. Furthermore, Trump said his meeting with North Korea’s leader Kim Jong Un may not take place. Political uncertainty in Italy, as a new government tries to form, is also added to the mix of more anxiety in the world marketplace.
There was also some downbeat economic news coming out of the European Union Wednesday, as business activity in the bloc slowed in May for the fourth straight month.
The U.S. data-point highlight of the week will be Wednesday afternoon’s release of the FOMC minutes from the last meeting, held on May 1-2. The FOMC minutes report has moved markets in recent months. Traders will be examining the report for clues on the trajectory of interest rate increases and FOMC members’ take on inflation.
The key “outside markets” today find Nymex crude oil prices weaker on profit taking after hitting a 3.5-year high on Tuesday.
Meantime, the U.S. dollar index is higher and not far below this week’s six-month high.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. flash services PMI and the flash manufacturing PMI, new residential home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower in early U.S. trading, on profit taking from recent gains. The bulls still have the overall near-term technical advantage as prices hit a two-month high on Tuesday. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at overnight high of 2,726.25 and then at Tuesday’s high of 2,741.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,700.00 and then at 2,680.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index December futures: Prices are lower and hit a two-week low in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen 6,875.00 and then at 6,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen the overnight low of 6,829.75 and then at 6,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering in a bear market. Bears still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 142 8/32 and then at 142 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 141 20/32 and then at the overnight low of 141 8/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher early today, on short covering after the market hit a contract low last week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 119.10.0 and then at 119.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 119.05.0 and then at 119.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading today. 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 bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 93.965 and then at 94.200. Shorter-term support is seen at the overnight low of 93.425 and then at this week’s low of 93.200. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
July Nymex crude oil prices are weaker on profit taking after hitting a 3.5-year high on Tuesday. Bulls are still in solid near-term technical control. Look for buy stops to reside just above technical resistance at the overnight high of $72.26 and then at Tuesday’s high of $72.90. Look for sell stops just below technical support at this week’s low of $71.32 and then at $71.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were weaker overnight, on downbeat reports regarding progress on the U.S.-China trade dispute. Bulls still have some upside momentum, led by wheat traders.