Friday, June 7–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
The market place is on hold Friday morning, awaiting the U.S. employment report, which is arguably the most important monthly economic report the government releases. Forecasts call for the key non-farm payrolls figure to have grown by around 170,000 in May, while the overall unemployment rate is expected to be steady from the previous month, at 7.5%. This particular jobs report holds extra significance in the market place, with some calling it the most important U.S. economic report in years. Reason: The May jobs data could tip the Federal Reserve’s hand on whether or not to continue, and for long, its quantitative easing of monetary policy. Any reading well beyond the consensus forecast for the non-farm payrolls number is very likely to cause high market volatility in the immediate aftermath of the report’s release. Asian stock markets were lower Friday and European stock markets were narrowly mixed, with both regions subdued ahead of the U.S. employment data. Japan’s Nikkei stock index has now lost 20% of its value in less than a month. German industrial production in April beat expectations, coming in at up 1.8% from March versus expectations for an unchanged reading. Other U.S. economic data due for release Friday includes consumer installment credit.–Jim U.S.
STOCK INDEXES
S&P 500 futures: Prices are near steady early today. Prices hit a four-week low on Thursday. Bulls still have the overall near-term technical advantage but have faded recently. 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 neutral early today. Today, shorter-term technical resistance comes in at 1,632.00 and then at this week’s high of 1,645.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,605.50 and then at this week’s low of 1,597.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index futures: Prices are near steady early today. Bulls have the overall near-term technical advantage but have faded. Prices hit a four-week low Thursday. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Thursday’s high of 2,954.00 and then at 2,961.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,941.50 and then at 2,932.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
Dow futures: Prices are slightly weaker early today. Bulls still have the overall near-term technical advantage, but have faded. Prices hit a four-week low Thursday. Buy stops likely reside just above technical resistance at Thursday’s high of 15,050 and then at 15,100. Sell stops likely reside just below technical support at Wednesday’s low of 15,000 and then at 14,950. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are firmer early today on more short covering in a bear market. Bears still have the overall near-term technical advantage. Prices are in a five-week-old downtrend on the daily bar chart. 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 142 even and then at this week’s high of 142 15/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 141 even and then at 140 8/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are firmer again early today on more short covering in a bear market. Bears still have the near-term technical advantage. 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 130.00.0 and then at this week’s high of 130.15.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129.23.5 and then at 129.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The U.S. dollar index is lower in early U.S. trading. Prices Thursday hit a 3.5-month low. Bulls are fading badly. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.640 and then at 82.000. Shorter-term support is seen at the Thursday’s low of 81.065 and then at 81.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Crude oil prices are firmer early today. Bulls and bears are still on a level near-term technical playing field. In July Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at $96.50. Look for sell stops just below technical support at the overnight low of $94.62 and then at $94.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were firmer in overnight trading. The slumping U.S. dollar on the foreign exchange market is a bullish underlying factor that is supporting the grains this week. Soybean bulls have upside near-term technical momentum. Corn trading remains choppy. Wheat bears remain in technical control. With the rocky start to the U.S. planting and growing season, it would not surprise me to see the adverse weather situation continue as the weather could move from cool and wet in June to hot and dry in July. It’s likely to be an extra volatile summer in the grain markets.
