Wednesday, July 24–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

China manufacturing data came in weaker than expected Wednesday. The preliminary HSBC China purchasing managers’ index fell to 47.7 in July versus a final reading of 48.2 in June, and is now at an 11-month low. A reading below 50.0 indicates contraction. Asian stock markets were pressured on the data. The weaker string of China economic data recently is laying the groundwork for more stimulative monetary policy measures coming from the Chinese government. China’s premier this week hinted at such. That would be bullish for the raw commodity sector, given the world’s most populous nation and world’s second-largest economy’s voracious appetite for raw commodities. The European Union’s preliminary Markit purchasing managers’ index rose to 50.4 in July from 48.7 in June, which is the first reading above 50.0 in a year and a half and suggests the Euro zone is slowly creeping out of its economic recession. European stock markets rose and the Euro currency rallied against the U.S. dollar on the upbeat economic data. German bond market prices dropped sharply, which suggests better risk appetite among European investors. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the US flash manufacturing PMI, new residential sales, and the weekly DOE liquid energy stocks report.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer early today and hovering near Tuesday’s record 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 1,700.00 and then at 1,710.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,685.70 and then at 1,675.40. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are solidly higher early today. The bulls have the overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is located at this week’s high of 3,060.00 and then at 3,075.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,035.00 and then at this week’s low of 3,023.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.

Dow futures: Prices are firmer early today and hit a fresh record high overnight. Bulls have the solid near-term technical advantage. Buy stops likely reside just above technical resistance at 15,600 and then at 15,650. Sell stops likely reside just below technical support at Tuesday’s low of 15,487 and then at 15,440. Shorter-term moving averages are bullish early today, 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 today. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are lower again early today. Bears have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 135 even and then at the overnight high of 135 8/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 134 14/32 and then at 134 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 September U.S. T-Notes: Prices are lower early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 127.00.0 and then at this week’s high of 127.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.20.5 and then at 126.11.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The September U.S. dollar index is slightly firmer in early U.S. trading, on tepid short covering. Bears 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 the overnight high of 82.320 and then at 82.500. Shorter-term support is seen at 82.000 and then at 81.750. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

Crude oil prices are near steady early today. Bulls still have the overall near-term technical advantage. In September Nymex crude, look for buy stops to reside just above resistance at $108.00 and then at last week’s high of $108.93. Look for sell stops just below technical support at the overnight low of $106.87 and then at $106.00. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were mostly firmer in overnight trading, on tepid short covering from recent selling pressure that has corn and wheat in deep bear markets, while soybean bulls and bears struggle for near-term control. The U.S. Corn Belt has received beneficial rains the past few days, and temperatures have cooled down significantly right during the key pollination stage of corn crop development. That’s bearish and is limiting buying interest across the grains complex. Some more rain chances are in the forecast for the coming days, along with non-threatening temperatures. This latest “weather market” in corn and soybeans has fizzled.