* LATEST MARKET DEVELOPMENTS *

Markets were quieter overnight, on this last trading day of the year, and ahead of the New Year’s Day holiday on Tuesday. Most U.S. markets close early Monday. U.S. and European stock markets were mixed to slightly higher overnight amid the ongoing U.S. fiscal cliff saga. There was no discernible progress during the weekend and it appears the U.S. government will at least temporarily go over the cliff. U.S. lawmakers need to reach a deal by January 3 to avoid a series of tax increases and spending cuts that automatically go into effect. While markets do not like the uncertainty associated with the fiscal cliff, they have become somewhat numb to the situation, as seen by the muted market action seen overnight. In other overnight news, there was some better Chinese manufacturing data released. The HSBC purchasing managers index rose to 51.5 in December, which is a 19-month high and was up from 50.5 seen in November. U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are slightly higher in early trading today on some tepid short covering after prices Friday saw solid losses that hit a five-week low and produced a technically bearish weekly low close. Bears have downside near-term technical momentum. 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 the overnight high of 1,392.00 and then at 1,400.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 1,383.00 and then at 1,375.00. Sell stops are likely located just below
those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are weaker early today and hit a fresh five-week low overnight. Bears have fresh downside near-term technical momentum. 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 bearish early today. Shorter-term technical resistance is located at 2,600.00 and then at 2,615.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,575.00 and
then at 2,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices near steady early today. Bears have fresh downside near-term technical momentum after prices Friday hit a fresh four-week low and closed at a technically bearish weekly low close. Sell stops likely reside just below technical support at 12,740 and then at 12,700. Buy stops likely reside just above technical resistance at 12,800 and then at 12,850. 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are firmer early today on some more short covering and bargain hunting, and even some fresh safe-haven demand. Bulls are recovering from recent losses but have some 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 bullish early today. Shorter-term resistance lies at Friday’s high of 148 25/32 and 149 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 148 5/32 and then at 148 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are slightly higher early today. Bulls are regaining 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 Friday’s 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 132.24.5 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 Friday’s high of 80.05 and then at 80.25. Shorter-term support is seen at the
overnight low of 79.69 and then at last week’s low of 79.42. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

Crude oil prices are weaker early today. Prices Friday hit a nine-week high as the bulls still have some upside technical momentum. In February Nymex crude, look for buy stops to reside just above resistance at $91.00 and then at last week’s high of $91.49. Look for sell stops just below technical support at $89.50 and then at $89.00. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were lower in overnight trading. The key “outside markets” are in a bearish posture for the grains today, as the U.S. dollar index is firmer and crude oil prices are weaker. The grain market bulls have faded badly recently and bears have some downside near-term technical momentum on their side. 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.