Friday, May 24–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Trading was quieter in overnight action around the world. The three-day U.S. Memorial Day holiday weekend could make for a calmer U.S. session, too. In overnight news, the Euro currency was supported on some positive economic news out of Germany. The German economy grew by 0.1% in the first quarter, versus the fourth quarter of last year. German business confidence rose in May, following two months of declines. Meantime, German consumer confidence rose for the fifth straight month and hit a multi-year high. European stocks were mostly weaker Friday. Asian stocks saw volatile trading early on but ended mixed, with the Japanese Nikkei index finishing the day not far from unchanged. U.S. economic data due for release Friday includes the advance report on durable goods orders.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are again lower early today as the bulls have faded late this week. A bearish “key reversal” down on the daily bar chart has occurred in this index this week, which is an early clue that a market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,655.30 and then at 1,673.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 1,632.70 and then at 1,625.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0

Nasdaq index futures: Prices are lower early today as the bulls are fading. A bearish “key reversal” down on the daily bar chart occurred in this index this week, which is an early clue that a market top is in place. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. 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 today. Shorter-term technical resistance is located at 3,000.00 and then at Thursday’s high of 3,008.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 2,961.25 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.

Dow futures: Prices are lower early today as the bulls are fading. A bearish “key reversal” down on the daily bar chart occurred in this index, which is an early clue that a market top is in place. Buy stops likely reside just above technical resistance at 15,289 and then at Thursday’s high of 15,325. Sell stops likely reside just below technical support at 15,200 and then at Thursday’s low of 15,177. Shorter-term moving averages are still 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today on tepid short covering. Prices hit a nine-week low Thursday. 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 143 14/32 and then at 144 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 142 23/32 and then at this week’s low of 142 9/32. 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 tepid short covering. Prices hit a nine-week low on Thursday. 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 to bullish early today. Shorter-term resistance lies at the overnight high of 131.16.0 and then at Thursday’s high of 131.23.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.05.0 and then at 131.00.0. 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 lower again in early U.S. trading, as the bulls are fading late this week. Bulls still have the overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 84.000 and then at 84.220. Shorter-term support is seen at the overnight low of 83.500 and then at 83.325. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

Crude oil prices are lower again early today. Bulls are fading. In July Nymex crude, look for buy stops to reside just above resistance at $94.00 and then at the overnight high of $94.39. Look for sell stops just below technical support at $93.00 and then at Thursday’s low of $92.21. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Markets were modestly lower in overnight trading, on a corrective pullback from Thursday’s gains. Grain bulls had a good day on Thursday. Corn bulls have gained upside technical momentum late this week. Soybean bulls are on a run as prices are hovering near this week’s eight-month high. Soybeans see a tight U.S. cash market and good U.S. export demand. Wheat remains the weak sister of the grains complex, but will follow corn if that market continues to rally.