* LATEST MARKET DEVELOPMENTS *

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. Lawmakers have until January 3 to come to agreement before the government falls off the fiscal cliff. President Obama meets with a group of Democrat and Republican leaders Friday on the matter. The House of Representatives will convene Sunday evening on a last-ditch effort to reach an agreement with the Obama administration. Many pundits are now reckoning the January 3 deadline will not be met, but that a deal will be reached in January. While markets do not like the uncertainty associated with the fiscal cliff, they are now becoming somewhat numb to the matter. In overnight news, U.S. and European stock markets weakened further on the U.S. fiscal cliff worries. Reports Friday said the European Union collective economy will contract in the fourth quarter of 2012, marketing the third straight quarter of negative growth. There was another well-received Italian bond auction Friday. Meantime, the Japanese stock market hit a new 21-month high overnight and the yen hit a 28-month low against the U.S. dollar on ideas the Bank of Japan will continue to use monetary policy to stimulate the Japanese economy. U.S. economic reports due for release Friday include the ISM Chicago business survey, the pending home sales index and the weekly DOE energy stocks report.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are weaker in early trading 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 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 the overnight high of 1,416.50 and then at this week’s high of 1,425.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,396.00 and then at last week’s low of 1,391.70. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker 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 bearish early today. Shorter-term technical resistance is located at the overnight high of 2,630.50 and then at 2,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,600.00 and then at this week’s low of 2,593.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices are lower early today. Bulls are fading. Sell stops likely reside just below technical support at Thursday’s low of 12,900 and then at 12,850. Buy stops likely reside just above technical resistance at 13,003 and then at Thursday’s high of 13,070. Shorter-term moving averages are neutral early today, as the 4-day moving average is below 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady early today. Bulls are trying to recover from recent losses but have 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 bullish early today. Shorter-term resistance lies at Thursday’s high of 148 18/32 and 149 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 148 even and then at the overnight low of 147 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are firmer early today. Bulls are regaining some upside momentum. 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 133.02.5 and then at 133.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.22.5 and then at 132.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is firmer in early U.S. trading, on short covering in a bear market. Bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.05 and then at 80.25. Shorter-term support is seen at the overnight low of 79.685 and then at this week’s low of 79.42. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

Crude oil prices are near steady early today. Prices overnight hit another fresh nine-week high as the bulls have gained good upside technical momentum recently. In February Nymex crude, look for buy stops to reside just above resistance at the overnight high of $91.49 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 firmer in overnight trading, on short covering. 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. Weekly USDA export sales data is out this morning. 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.