Thursday, March 21–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The Cyprus financial crisis has still not been resolved and banks there are closed until next week. This is a messy situation, as Russia has its hands in the pie and the European Union and International Monetary Fund don’t like it. Mega-rich Russians have a large amount of their money parked in Cyprus banks. Russia has indicated it could bail out Cyprus, but details remain sketchy. The European Central Bank says it has funds ready for a Cyprus bailout, but insists there needs to be an EU-backed financial plan in place first. Meantime, there was more downbeat economic data coming out of the European Union Thursday. The Markit data company reported its composite purchasing managers’ index for the Euro zone fell to 46.5 in March from 47.9 in February. Any reading below 50.00 suggests contraction. Combined with recent EU economic data, Thursday’s fresh numbers further point to the Euro zone being in economic recession for yet another quarter in the first quarter of 2013. The Cyprus situation and the weak EU economic data combined to pressure European stock markets and the Euro currency. Asian stocks were mixed overnight as the Japanese stock market rallied as the yen continued to deflate. Chinese manufacturing data for March showed a preliminary PMI reading of 51.7 versus the final reading of 50.4 in February. The slightly better PMI reading for March did slightly lift the Shanghai stock market. The market place is keeping an eye on developments coming out of North Korea. That nation issued fresh threats of a possible nuclear strike against U.S. bases in Japan. Any escalation in tensions between the U.S. and North Korea could send investors into safe-haven assets like the U.S. dollar, U.S. Treasuries and gold. Traders and investors have quickly digested the latest U.S. Federal Open Market Committee statement issued Wednesday afternoon. The FOMC left its monetary policy unchanged, which was not unexpected. However, what was just a bit bearish for the gold market and other raw commodity markets is that the Fed said it is aware of the costs of a very easy U.S. money policy and that it will be keeping a very close eye on U.S. economic growth progress. It appears the Fed, while keeping its monetary policy very accommodative at present, is beginning to slowly lay the ground work to wind down its easy money policies down the road–especially as the U.S. economy is picking up a slight head of steam. Fed Chairman Ben Bernanke held a press conference following the meeting’s conclusion Wednesday afternoon and said nothing market-sensitive. U.S. economic data due for release Thursday includes the weekly jobless claims report, the U.S. flash manufacturing PMI, the monthly house price index, existing home sales, leading economic indicators, and the Philadelphia Fed business survey.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady early yesterday. The shorter-term moving averages (4-, 9- and 18-day) are neutral early yesterday. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early yesterday. Yesterday, shorter-term technical resistance comes in at last week’s high of 1,558.60 and then at 1,575.00. Buy stops likely reside just above those levels. Downside support for active traders yesterday is located at Wednesday’s low of 1,537.00 and then at this week’s low of 1,529.60. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are weaker early yesterday. The shorter-term moving averages (4- 9-and 18-day) are neutral early yesterday. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early yesterday. Shorter-term technical resistance is located at the overnight high of 2,786.50 and then at 2,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 2,772.50 and then at this week’s low of 2,749.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.

Dow futures: Prices are slightly higher early yesterday. Sell stops likely reside just below technical support at 14,400 and then at 14,360. Buy stops likely reside just above technical resistance at Wednesday’s record high of 14,470 and then at 14,500. Shorter-term moving averages are bullish early yesterday, as the 4-day moving average is above the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early yesterday. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are weaker early yesterday. Trading has turned choppy this week. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early yesterday. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early yesterday. Shorter-term resistance lies at the overnight high of 143 even and then at 143 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 142 18/32 and then at this week’s low of 142 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 June U.S. T-Notes: Prices were weaker overnight. Bulls and bears are presently on a level near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early yesterday. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early yesterday. Shorter-term resistance lies at the overnight high of 131.11.5 and then at 131.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.08.0 and then at this week’s low of 131.02.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The U.S. dollar index is near steady early yesterday. The greenback bulls still have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early yesterday. The dollar index finds shorter-term technical resistance at this week’s high of 83.315 and then at 83.500. Shorter-term support is seen at the overnight low of 82.880 and then at this week’s low of 82.625. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

Crude oil prices are slightly lower early yesterday. Bulls still have the slight near-term technical advantage but need to show more power soon to keep it. In May Nymex crude, look for buy stops to reside just above resistance at $94.00 and then at this week’s high of $94.32. Look for sell stops just below technical support at the overnight low of $92.79 and then at $92.00. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed overnight. Traders will closely examine this morning’s weekly USDA export sales report. Grain traders are also looking ahead to next week’s USDA planting intentions report, which is one of the most important USDA grain reports of the year.