Thursday, May 2–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
Traders and investors were awaiting the outcome of the European Central Bank meeting Thursday to discuss EU monetary policy. Many had expected the ECB to cut its key interest rate by 0.25%, to 0.5%, which is precisely what the ECB did Thursday. Recent weak EU economic data made the case for such action. Just Thursday it was reported that Euro zone manufacturing activity in April declined. The Markit manufacturing gauge came in at 46.7 in April compared to 46.8 in March. A number below 50 indicates a month-to-month decline in manufacturing activity. Traders and investors will also be scrutinizing comments from ECB president Mario Draghi at this monthly press conference following the ECB meeting. In Asian news overnight, the HSBC China manufacturing PMI came in at 50.4 in April versus 51.6 in March. This reading follows the official China government PMI reported Wednesday, which was also down from the previous month. The weakening China PMI data this week has been a bearish weight on the raw commodity sector, including the precious metals, as it suggests less demand from the world’s largest consumer of raw commodities. U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job cuts report, the international trade report, the New York ISM report on business, and the global manufacturing PMI.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are firmer early today. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-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 Wednesday’s high of 1,595.40 and then at 1,610.00. Buy stops likely reside just above those levels. Downside support for active traders today is located this week’s low of 1,574.50 and then at 1,560.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are firmer early today. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Wednesday’s high of 2,887.00 and then at 2,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 2,862.25 and then at Tuesday’s low of 2,853.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
Dow futures: Prices are firmer early today. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at 14,700 and then at Wednesday’s high of 14,743. Sell stops likely reside just below technical support at Wednesday’s low of 14,630 and then at 14,600. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are slightly lower early today. Bulls still have the solid 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 149 12/32 and then at the contract high of 149 23/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 148 30/32 and then at this week’s low of 148 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 June U.S. T-Notes: Prices are near steady early today after hitting a contract high Wednesday. Bulls have the solid 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the contract high of 133.25.0 and then at 134.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 133.16.0 and then at 133.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The U.S. dollar index is higher in early U.S. trading and is seeing a corrective bounce after prices hit a nine-week low on Wednesday. The bulls have faded badly recently. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.830 and then at 82.000. Shorter-term support is seen at the overnight low of 81.640 and then at Wednesday’s low of 81.370. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Crude oil prices are firmer early today on a corrective bounce from this week’s strong selling pressure. Bears still have some downside momentum on their side. In June Nymex crude, look for buy stops to reside just above resistance at $92.00 and then at $92.50. Look for sell stops just below technical support at $91.00 and then at the overnight low of $90.65. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were higher in overnight trading, on a corrective rebound from selling pressure seen Wednesday. Rains and cold temperatures in the forecast for the U.S. Corn Belt in the coming days are bullish for corn, which in turn is the leader of the grains complex, at present. Wheat bulls still have some upside near-term technical momentum on their side. The U.S. hard red winter wheat crop is in bad shape. Meantime, light farmer selling in the U.S. cash market supports soybean futures prices. Grain traders will closely examine Thursday morning’s weekly USDA grain export sales report.
