Friday, June 28–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The focus of the market place this week has been on the gold market and the beating it has taken this year. On this last trading day of the month and of the quarter, gold prices are down around 30% in value this year and down around 25% in the second quarter. Reports say that gold exchange traded funds have shed around 22% of their value this year and have lost 16% of their total funding in this quarter. And unlike the big sell off in gold that occurred in April, this latest downdraft has not seen buyers of physical gold step up to do some bargain hunting. The gold bulls can point to the fact that the market is now technically oversold and due for at least a corrective bounce. Gold and the raw commodity sector have been on the defensive for the past week, following last week’s hawkishly perceived FOMC meeting of the U.S. Federal Reserve. The market place read that meeting as suggesting the Fed will start to “taper” its monthly bond buying (quantitative easing) by the end of this year, and the program could be finished by this time in 2014. However, this week several U.S. Federal Reserve officials and even other major world central bank officials have tried to assuage the market place with more dovish remarks on their monetary policies—but with limited success. More U.S. Fed officials are set to give speeches on Friday, which will be closely scrutinized by the market place. For the raw commodity sector to come out of its bearish funk, gold prices will have to at least stabilize and crude oil prices will have to push above the psychological resistance level of $100 a barrel. Crude oil prices this week have started to rally after recent sideways and choppy trading. It will be an extra important trading week next week. China manufacturing data is due out Monday and the U.S. employment report is due out next Friday. Asian stocks were firmer overnight and European stocks were mixed Friday in uneventful trading. Traders and investors are awaiting next week’s batch of economic data. Book-squaring at the end of the month and the quarter are also featured Friday. The Bank of Japan’s deputy governor said Friday the past three months of aggressive BOJ easing measures have been effective and he said the need for further monetary stimulus is not necessary. The deputy governor also said the BOJ is very concerned about the present financial liquidity problems that have surfaced in China. U.S. economic data due for release Friday includes the ISM Chicago business survey and the University of Michigan consumer sentiment survey.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are slightly higher early today. Bulls are regaining some near-term momentum, but have more work to do to suggest an uptrend can be re-established. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,614.10 and then at 1,625.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 1,594.90 and then at Wednesday’s low of 1,573.30. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today. Bulls are working to regain upside momentum, but have more heavy lifting to do in the near term to suggest prices can trend higher. The shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is located at this week’s high of 2,918.25 and then at 2,925.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 2,882.25 and then at 2,860.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer early today. Bulls are regaining some upside momentum this week, but have more work to do to suggest prices can begin to trend higher. Buy stops likely reside just above technical resistance at 15,000 and then at 15,040. Sell stops likely reside just below technical support at Thursday’s low of 14,930 and then at 14,900. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer early today on more short covering in a bear market. Bears still have the solid overall near-term technical advantage. Prices are in a two-month-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 136 4/32 and then at 136 23/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 21/32 and then at 135 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are firmer early today on more short covering. Bears still have the solid near-term technical advantage. 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 bullish early today. Shorter-term resistance lies at the overnight high of 126.29.5 and then at 127.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.19.5 and then at 126.10.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The September U.S. dollar index is near steady in early U.S. trading, on profit taking after prices hit a three-week high on Thursday. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 83.270 and then at this week’s high of 83.430. Shorter-term support is seen at 83.000 and then at Wednesday’s low of 82.735. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

Crude oil prices are firmer early today. Bulls have late this week gained fresh upside near-term technical momentum. In August Nymex crude, look for buy stops to reside just above resistance at the overnight high of $97.82 and then at $98.00. Look for sell stops just below technical support at the overnight low of $96.55 and then at $96.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were narrowly mixed in overnight trading. Short covering and pre-report position evening are featured early Friday, ahead of a USDA report out late Friday morning which will update planted acres figures for corn and soybeans. This USDA report will be one of the more important ones of the year. The grain market bulls have faded recently amid the generally bearish attitudes in the raw commodity sector at present. Weather in the U.S. Corn Belt remains benign at present. However, many areas in the central Corn Belt remain too wet (Iowa and Minnesota), which has prevented planting of corn and soybeans, or stunted their early growth. Trading Friday and next week could set the tone for the grain future markets for the next several weeks.