Wednesday, February 27–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Traders and investors are still digesting Tuesday’s testimony on the U.S. economy to the Senate by Federal Reserve Chairman Ben Bernanke. As expected, the central bank chief said U.S. monetary policy will remain very accommodative for the foreseeable future. He also said there is no U.S. equity bubble. Bernanke’s remarks boosted the U.S. stock market as well as gold and silver markets Tuesday. Bernanke speaks to a U.S. House of Representatives committee Wednesday. The European Union and its sovereign debt problems are still simmering on the front burner of the market place. The Italian elections failed to show a clear winner as voters ostensibly rebuked present government austerity measures. Some modestly upbeat EU data on consumer and business confidence was released Wednesday as the Economic Sentiment Indicator rose to 91.1 in February versus 89.5 in January, and reaching the highest level since last May. That news helped to modestly lift the European stock markets and the Euro currency Wednesday. There is an Italian government debt auction Wednesday that will be very closely scrutinized by the market place to gauge European investor risk appetite. The EU debt crisis flaring up again has been a supportive element for safe-haven assets such as gold, U.S. Treasuries and the U.S. dollar. 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. That’s also a mildly supportive factor for the safe-haven investment assets this week. U.S. economic data due for release Wednesday includes the weekly includes the weekly MBA mortgage applications survey, the advance report on durable goods, the pending home sales index, and the weekly DOE energy stocks report.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer early yesterday. The bulls still have the overall near-term technical advantage but have faded recently. The shorter-term moving averages (4-, 9- and 18-day) are bearish early yesterday. 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 yesterday. Yesterday, 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 yesterday is located at this week’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. Bulls still have the overall near-term technical advantage but have faded recently. The shorter-term moving averages (4- 9-and 18-day) are bearish early yesterday. 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 yesterday. Shorter-term technical resistance is located at Tuesday’s high of 2,718.25 and then at 2,725.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 2,689.00 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 yesterday. The bulls still have the overall near-term technical advantage, but have faded this week. Sell stops likely reside just below technical support at Tuesday’s low of 13,810 and then at this week’s low of 13,770. Buy stops likely reside just above technical resistance at 13,900 and then at 13,950. Shorter-term moving averages are neutral early yesterday, 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 neutral early yesterday. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are higher early yesterday and hovering near a five-week high on safe-haven demand. Bulls have upside momentum amid a resurfacing of the EU debt crisis and the U.S. sequestration deadline nearing. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. 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 bullish early yesterday. Shorter-term resistance lies at Tuesday’s 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 31/32 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 firmer early yesterday and hovering near a two-month high, on safe-haven buying. Bulls have upside momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. 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 bullish early yesterday. Shorter-term resistance lies at Tuesday’s 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 131.14.5 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 lower early yesterday on profit taking after hitting a six-month high Tuesday. The greenback bulls have upside momentum as the dollar is this week seeing fresh safe-haven demand. Slow stochastics for the dollar index are bearish early yesterday. The dollar index finds shorter-term technical resistance at 82.00 and then at Tuesday’s high of 82.24. Shorter-term support is seen at 81.81 and then at 81.50. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

Crude oil prices are near steady early yesterday. Prices Tuesday hit a two-month low. The stronger U.S. dollar and risk aversion have been pressuring crude recently. In April Nymex crude, look for buy stops to reside just above resistance at the overnight high of $93.08 and then at $93.50. Look for sell stops just below technical support at this week’s low of $91.92 and then at $91.50. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were mostly higher overnight. Corn was near steady, while soybeans and wheat were firmer. There have been better moisture patterns in the central U.S. that are working to alleviate the severe soil shortages in the region and that’s bearish for the grain markets. However, there has also been some fresh export demand for U.S. grains recently.