Wednesday, May 22–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
The market place is mostly on hold Wednesday morning, awaiting Federal Reserve Chairman Ben Bernanke’s speech on the economy and monetary policy before the Congress later in the morning. The Fed’s FOMC minutes are also due out Wednesday afternoon. Traders and investors will closely scrutinize Bernanke’s remarks and the FOMC minutes for clues on the U.S. central bank’s potential course of monetary policy in the coming weeks and months. There has been a growing belief in the market place that the Fed is aiming to wind down its quantitative easing program (QE3) sooner rather than later. The term presently bandied about is “tapering” of the Fed’s massive monthly bond-buying program. However, there is no clear consensus among market and Fed watchers regarding what the Fed will do with its monetary policy. There is even speculation that Bernanke on Wednesday will re-emphasize his commitment to easy money policies in the coming months. New York Federal Reserve Bank President William Dudley late Tuesday said it will take three or four months from now to determine if the U.S. central bank should begin tapering its monthly bond-buying program. The Bank of Japan at its regular meeting on Wednesday made no major changes to its monetary policy, which was what the market place expected. The BOJ said the Japanese economy is starting to improve. The Japanese yen resumed its descent on the BOJ news. On Thursday, there will be key manufacturing data out of China released, which will also garner close market attention. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, the weekly DOE energy stocks report, and the FOMC minutes.–Jim U.S.
STOCK INDEXES
S&P 500 futures: Prices are slightly higher early today and hovering near Tuesday’s all-time high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above 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 Tuesday’s record high of 1,673.00 and then at 1,685.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,660.20 and then at 1,650.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are slightly higher early today and hovering just below Tuesday’s 12-year high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Tuesday’s high of 3,036.75 and then at 3,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 3,010.00 and then at 3,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
Dow futures: Prices are slightly higher early today and hovering near Tuesday’s record high. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Tuesday’s record high of 15,405 and then at 15,450. Sell stops likely reside just below technical support at Tuesday’s low of 15,305 and then at 15,260. Shorter-term moving averages are bullish early today, as the 4-day moving average is above 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 today. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are firmer early today on short covering. Bears still have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 144 25/32 and then at 145 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 144 4/32 and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 June U.S. T-Notes: Prices are firmer early today on short covering. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 132.04.5 and then at 132.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.28.5 and then at 131.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The U.S. dollar index is slightly higher in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 84.300 and then at last week’s high of 84.515. Shorter-term support is seen at the overnight low of 83.760 and then at 83.570. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Crude oil prices are weaker early today. Bulls still have the slight near-term technical advantage but trading remains choppy. In July Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at $96.50. Look for sell stops just below technical support at the overnight low of $95.34 and then at $95.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Markets were narrowly mixed in overnight trading. Corn bulls are fading, which is also limiting the upside in wheat. Soybean bulls are making a move that is impressive. Monday’s weekly USDA crop progress report showed big progress made planting the U.S. corn crop last week, and that’s the major bearish factor for corn at present. Soybeans see a tight U.S. cash market and an improving chart posture inviting buying interest. Weather in the U.S. Corn Belt is still a main focus for grain traders. Showers and thunderstorms recently, and more in the forecast, are still delaying seeding of corn and soybeans. However, traders reckon the bearish effect of soil moisture levels being recharged after last year’s major drought outweigh the bullish planting delays.
