Wednesday, May 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins, after selling off Tuesday.
The featured data point in the U.S. at mid-week is the ADP national employment report for April, which is expected to see a rise of 800,000 versus a gain of 517,000 jobs in March.
U.S. Treasury Secretary and former Fed Chair Janet Yellen late Tuesday walked back hawkish comments she made earlier that day. Yellen Tuesday morning warned U.S. interest rates might have to rise to stop the U.S. economy from overheating. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said. Later,
Yellen clarified her comments made earlier. “It’s not something I’m predicting or recommending…; if anyone appreciates the independence of the Federal Reserve, I think that person is me.” The marketplace was surprised by Yellen’s morning remarks, including the stock market selling off, and gold and silver doing the same. While the marketplace was surprised by Yellen’s initial comments on raising rates, many veteran market watchers agreed with her logic, which is essentially to keep serious price inflation at bay. In a sign of the economic times, a Dow Jones Newswires headline Wednesday morning read, “Everything Screams Inflation.”
In the Euro zone Wednesday, the March producer price index came in at up 1.1% from February and up 4.3%, year-on-year. Those numbers are running a bit hotter than in previous months, but still not deemed problematic.
The key outside markets today see the U.S. dollar index a bit lower. Nymex crude oil prices are lower after hitting a seven-week high Tuesday, and are trading around $66.50 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.6%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. Treasury quarterly refunding announcement, the U.S. services PMI, the ISM report on business services, 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 higher in early U.S. trading on a rebound from Tuesday’s sell off. Bulls have the solid overall near-term technical advantage. There are no strong, early clues to suggest a market top is close at hand. 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 early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 4,185.50 and then at the record high of 4,211.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,155.25 and then at 4,110.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.5
June Nasdaq index futures: Prices are higher in early U.S. trading after Tuesday’s strong selling pressure. 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 early today. Shorter-term technical resistance is seen at 13,700.00 and then at Tuesday’s high of 13,792.50. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 13,507.75 and then at this week’s low of 13,380.75. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading today. Bears 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 even with the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 158 1/32 and then at this week’s high of 158 23/32. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 157 11/32 and then at this week’s low of 156 21/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are a bit lower in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 132.15.0 and then at 132.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132.05.0 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.4
EURO CURRENCY
The June Euro currency futures are slightly up and hit a two-week low in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2086 and then at 1.2100. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1995 and then at 1.1950. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
June Nymex crude oil prices are higher and hit a two-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Look for buy stops to reside just above technical resistance at the March high of $67.29 and then at $68.00. Look for sell stops just below technical support at $65.00 and then at Tuesday’s low of $64.29. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures are higher again in early U.S. pre-market trading. Corn is leading the grains higher. The grain market bulls have the solid overall near-term technical advantage amid price uptrends in place on the daily and the longer-term charts and prices near multi-year highs. Sellers in the grains are few, given the generally tight world supply and demand balance and the onset of the U.S. growing season for corn and soybeans.
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