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

* LATEST MARKET DEVELOPMENTS *

Equities prices worldwide have been rallying recently, with the U.S. Dow and S&P 500 stock index prices at or near record highs. That bullish momentum in stocks is keeping investor and trader money flowing into the stock markets at the expense of most other investment assets, including raw commodities and gold. Many investors and traders at present reckon the stock market is the only game in town. However, this situation will not proceed indefinitely. The rally in the stock market is now very mature, which suggests most of the easy money has already been made on the long side of stocks, and that those now climbing on board the long side of the stock market are chasing it. It’s never a good idea to chase a market that is in a very mature trending move. One very early clue that the stock market bulls are running out of steam is price action in the U.S. Treasury bond and note futures Wednesday morning. Both markets are posting solid rallies, with U.S. T-Notes hitting a fresh 3.5-month high. This suggests fresh flight-to-safety buying by investors, which will pull way demand for risk assets like stocks. Gold market bulls are disappointed the Cyprus bank debacle did not offer more lasting support for the safe-haven precious metal. There were no major developments in the situation overnight, and Cyprus banks are set to reopen Thursday. In other news, European Union consumer and business confidence declined in the latest month, in another sign the Euro zone economy is remains in the dumps. And the surveys were taken before the Cyprus crisis, which suggests Euro zone consumer and business confidence will not improve in next month’s report. The approaching Easter holiday is somewhat squelching trading interest in many markets this week. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications 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 early yesterday and hovering not far below Monday’s five-year high. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early yesterday. Yesterday, shorter-term technical resistance comes in at Monday’s high of 1,560.30 and then at 1,575.00. Buy stops likely reside just above those levels. Downside support for active traders yesterday is located at this week’s low of 1,539.20 and then at last week’s low of 1,529.60. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker early yesterday but not far below the recent six-month high. Bulls have the overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are neutral early yesterday. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early yesterday. Shorter-term technical resistance is located at the overnight high of 2,806.00 and then at the March high of 2,817.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 2,784.50 and then at this week’s low of 2,771.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.

Dow futures: Prices are weaker early yesterday but hovering not far below Monday’s all-time record high. Bulls have the solid near-term technical advantage. Sell stops likely reside just below technical support at 14,400 and then at 13,350. Buy stops likely reside just above technical resistance at Monday’s high of 14,488 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 early yesterday. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are higher early yesterday and hit a fresh four-week high. Bears have the overall near-term technical advantage, but the bulls yesterday have gained fresh upside momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early yesterday. Shorter-term resistance lies at the overnight high of 144 20/32 and then at the March high of 144 29/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 144 even and then at yesterday’s low of 143 13/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 June U.S. T-Notes: Prices were higher overnight and hit a fresh 3.5-month high. Bulls yesterday gained good upside near-term technical momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early yesterday. Shorter-term resistance lies at the overnight high of 132.05.0 and then at 132.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.24.0 and then at the overnight low of 131.19.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5

U.S. DOLLAR INDEX

The U.S. dollar index is higher and hit a fresh 7.5-month high overnight. The greenback bulls have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bullish early yesterday. The dollar index finds shorter-term technical resistance at 83.500 and then at 83.750. Shorter-term support is seen at the overnight low of 83.010 and then at Tuesday’s low of 82.880. Wyckoff’s Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

Crude oil prices are weaker early yesterday on profit taking from good gains seen earlier this week. Prices Tuesday hita five-week high. Bulls still have the near-term technical advantage. In May Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at Tuesday’s high of $96.45. Look for sell stops just below technical support at $95.00 and then at Tuesday’s low of $94.67. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were firmer overnight. Corn and wheat market bulls have some upside near-term technical momentum, with soybean bulls also gaining a bit of momentum this week. Grain traders are looking ahead to Thursday’s USDA planting intentions and quarterly grain stocks reports. The plantings intentions report is one of the most important USDA grain reports of the year. Trading in grain futures markets is likely to be subdued again Wednesday, ahead of Thursday’s important USDA data.