* LATEST MARKET DEVELOPMENTS *

Many traders and investors are on the sidelines this week, enjoying the holiday season. That makes for thin market conditions. Investors and traders continue to worry about the U.S. fiscal cliff negotiations that have stalled and now with only a few days left for U.S. lawmakers to reach a deal. President Obama did come back from his Hawaii vacation early, and more meetings are scheduled for Thursday. Lawmakers have until January 3 to come to agreement before the government falls off the fiscal cliff. Markets do not like uncertainty and most markets remain jittery as the deadline draws closer. Credit ratings agencies have recently warned that if the U.S. does go over the fiscal cliff it risks sovereign credit downgrades. In overnight news, the Japanese stock market rallied to a nearly two-year high on hopes for more monetary policy stimulus coming from the Bank of Japan. European stock markets were firmer, helped in part by a successful auction of Italian bonds and better Italian manufacturing data. U.S. economic reports due for release Thursday include the weekly jobless claims report, the Chicago Fed midwest manufacturing index, and the consumer confidence index.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer in early trading today. Bulls have faded a bit recently as a four-week-old uptrend on the daily bar chart has been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 1,425.00 and then at 1,433.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,411.00 and then at 1,406.00. 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 faded recently. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is located at 2,650.00 and then at Wednesday’s high of 2,658.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 2,622.00 and then at the December low of 2,609.25. 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 faded recently as a five-week-old uptrend on the daily bar chart has been negated. Sell stops likely reside just below technical support at Wednesday’s low of 13,020 and then at 13,000. Buy stops likely reside just above technical resistance at Wednesday’s high of 13,100 and then at 13,160. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today. Bulls have been trying to recover from recent losses but have much
more work to do. 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 neutral to bearish early today. Shorter-term resistance lies at the overnight high of 147 20/32 and 148 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 146 30/32 and then at 146 24/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

March U.S. T-Notes: Prices are weaker early. Bulls have been trying to forge a market bottom but have more heavy lifting to do to suggest such has occurred. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 132.17.5 and then at 132.20.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.10.0 and then at 132.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The March U.S. dollar index is lower in early U.S. trading. Bears still have the solid overall near-term technical advantage. Prices last week hit a three-month low. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 79.70 and then at this week’s high of 79.81. Shorter-term support is seen at 79.34 and then at last week’s low of 79.01. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

Crude oil prices are near steady early today. Prices overnight hit a fresh nine-week high as the bulls have now gained good upside technical momentum. In February Nymex crude, look for buy stops to reside just above resistance at the overnight high of $91.35 and then at $92.00. Look for sell stops just below technical support at $90.00 and then
at $89.50. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed in overnight trading. The grain market bulls have faded badly recently and bears still have some downside near-term technical momentum on their side. Bulls are seeking some fresh, bullish fundamental inputs for the grains. Bullish news in the grains has been scarce recently. However, it would not surprise me to see some fresh speculative money enter the grain markets on the long side as the new year gets under way.