Wednesday, August 28–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

As the U.S. appears poised to take military action against Syria after its government regime used chemical weapons against its citizens, the market place is extra nervous, which has favored safe-haven assets such as gold and U.S. Treasuries. Gold prices hit a 3.5-month high overnight and are now up around 20% from the June low, which was a nearly three-year low. A long-time gauge of a market entering bull market territory is when its price moves up by 20% from its last major low. Crude oil prices have also risen sharply recently and are at a two-year high, on worries about disruptions to oil exports from the Middle East. Asian and European stock markets were again under pressure Wednesday on the Syria tensions. There are worries any U.S. military intervention in Syria could escalate into further instability and violence in the already volatile Middle East. Specifically, the market place wonders what the Syrian regime will do after it’s been hit with U.S. missiles. Will it attack Israel? Will it use more chemical weapons? Will Iran get involved? There is an old saying that the first thing that goes out the window during a major military operation is the original plan. U.S. economic data due for release Wednesday includes the weekly MBA mortgage application survey, pending home sales and the weekly DOE energy stocks report.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady early today after hitting a seven-week low on Tuesday. Bulls are fading again. Prices are in a four-week-old downtrend on the daily bar chart. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,634.40 and then at 1,645.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,625.00 and then at 1,615.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly higher early today. Prices hit a four-week low on Tuesday. The bulls still have the overall near-term technical advantage, but are fading again. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. 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 today. Shorter-term technical resistance is located at 3,075.00 and then at 3,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 3,052.00 and then at 3,025.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady early today. Bulls have faded badly recently. Buy stops likely reside just above technical resistance at 14,800 and then at 14,845. Sell stops likely reside just below technical support at 14,700 and then at 14,650. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are slightly lower early today but did hit a two-week high overnight. Bears still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 133 16/32 and then at 134 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 27/32 and then at 132 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 September U.S. T-Notes: Prices are slightly lower early today. Bears still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 Tuesday’s high of 125.28.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.14.0 and then at Tuesday’s low of 125.01.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The September U.S. dollar index is higher in early U.S. trading, on more short covering and some safe-haven buying. The bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 81.615 and then at last week’s high of 81.950. Shorter-term support is seen at the overnight low of 81.135 and then at 81.000. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

October Nymex crude oil prices are solidly higher early today and hit a more than two-year high overnight. The Middle East unrest is boosting oil. Crude bulls have the solid overall near-term technical advantage. In October Nymex crude, look for buy stops to reside just above resistance at $111.00 and then at the overnight contract high of $112.24. Look for sell stops just below technical support at $109.00 and then at $107.95. Wyckoff’s Intra-Day Market Rating: 7.5

GRAINS

Markets were slightly higher overnight. Major heat and little to no rain are still in the U.S. Corn Belt weather forecast for the next several days. That is still bullish for soybeans and corn. The risk aversion in the market place due to the Syria tensions has caused the speculators to back away from the long side of the grains this week. The technical postures of corn and soybeans have turned more bullish recently. Wheat remains overall technically bearish, but will follow corn and soybeans if those markets continue to rally.