* LATEST MARKET DEVELOPMENTS *
The European Union and its sovereign debt problems are back on the front burner of the market place, again, after a few months’ hiatus. Italian elections that just concluded and failed to show a clear winner indicated voters ostensibly rebuked present government austerity measures meant to repair Italy’s damaged economic and financial structure. It also suggests political instability in Italy in the coming months. The Italian vote left the market place wondering when the next shoe will fall in the EU debt crisis that remains a serious matter in the world market place. Flight-to-safety buying of U.S. Treasuries, German bunds, gold and the U.S. dollar all quickly came back into vogue late Monday. Meantime, risk assets such as world stock markets and many commodity markets, and the Euro currency, were pressured on the Italian vote news. Other than the safe-haven German bunds, European bond yields were on the rise as fears of an EU debt contagion are again surfacing. There are Italian government debt auctions Tuesday and Wednesday that will be very closely scrutinized by the market place. The U.S. government’s likely inability to agree on a taxing and spending plan by the March 1 sequestration deadline is added to a nervous and uncertain atmosphere in the world market place this week. Traders and investors are awaiting the Tuesday and Wednesday testimony on the U.S. economy to Congress from Federal Reserve Chairman Ben Bernanke. Traders and investors will be looking for fresh clues on the direction of U.S. monetary policy in the coming weeks and months. In Asia, the Japanese stock market fell as the yen rallied on safe-haven investor demand due to the resurfacing of the EU debt crisis. The yen had been on a steady decline for the past four months, but made an abrupt about-face on Monday afternoon. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales indexes, the S&P/Case-Shiller home price index, the monthly and quarterly house price indexes, the consumer confidence index, new residential sales, and the Richmond Fed business survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are firmer early today on a corrective bounce from strong selling pressure Monday.The bulls still have the overall near-term technical advantage but did fade Monday. 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 early today. Today, shorter-term technical resistance comes in at 1,500.00 and then at 1,515.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 1,482.00 and then at 1,475.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are firmer in early trading on a corrective bounce from solid losses Monday. Bulls still have the overall near-term technical advantage but did fade on Monday. 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 2,725.00 and then at 2,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 2,691.75 and then at 2,675.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
Dow futures: Prices are firmer today and seeing a corrective bounce from strong losses on Monday that did produce a bearish “key reversal” down on the daily bar chart, which does suggest a market top is now in place. The bulls still have the overall near-term technical advantage, but did fade Monday. Sell stops likely reside just below technical support at Monday’s low of 13,770 and then at 13,750. Buy stops likely reside just above technical resistance at 13,850 and then at 13,900. 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: 5.5
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are higher early today and hit a fresh five-week high on safe-haven demand. Bulls have quickly gained upside momentum amid a resurfacing of the EU debt crisis. Shorter-term moving averages (4- 9- 18-day) are bullish 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 bullish early today. Shorter-term resistance lies at the overnight high of 144 26/32 and then at 144 30/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at
the overnight low of 143 30/32 and then at 143 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher early today and hit a fresh two-month high overnight, on safe-haven buying. Bulls
have quickly gained upside momentum. Shorter-term moving averages (4- 9- 18-day) are bullish 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 bullish early today. Shorter-term resistance lies at the overnight high of 131.26.0 and then at 132.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.12.5 and then at 131.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady early today on profit taking after hitting a six-month high Monday. The greenback bulls have shown solid power recently and are this week seeing fresh safe-haven demand due to the EU debt crisis. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 82.19 and then at 82.50. Shorter-term support is seen at 81.81 and then at 81.50. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Crude oil prices are lower early today and hit a fresh two-month low overnight. The stronger U.S. dollar and risk aversion are pressuring crude this week. In April Nymex crude, look for buy stops to reside just above resistance at the overnight high of $92.65 and then at $93.00. Look for sell stops just below technical support at the overnight low of $91.92 and then at $91.50. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were mixed overnight. The grain markets have been feeling pressure from the overall selling seen in the raw commodity market sector, with crude oil leading the downside price action. The risk-averse attitudes now in the market place, due to the resurfacing of the EU debt crisis, are another bearish element for the grains. There have also better moisture patterns in the central U.S. that are working to alleviate the severe soil shortages in the region. My bias is that there is still some near-term price pressure to come in the grains, but I am not longer-term bearish.
