Tuesday, May 13–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

In overnight news the Organization for Economic Cooperation
and Development (OECD) reported China’s economic growth rate
will continue to slow in the coming months, while other
countries’ economies will see steady growth. Meantime,
China’s industrial output grew by 8.7% in April, year-on-
year, but was below expectations. To repeat what I’ve said
many times, China’s economic numbers (if one can believe
them) are still the envy of the major world economies. I
suspect the bigger worry is that China’s ballooning economy
comes with its financial system that is untested during the
boom times. Economic history shows that booming economies
are followed by busts—and as they say, the bigger they are
the harder they fall.

The closely watched German ZEW economic expectations index
was released Tuesday and saw confidence decline in May for
the fifth month in a row, at 33.1 versus 43.2 in April. The
German Bundesbank on Tuesday threw its support behind a
likely upcoming move by the European Central Bank to ease
its monetary policy. The Bundesbank is very worried about
price deflation in the European Union. That news helped to
sink the Euro currency and in turn boost the U.S. dollar
index.

The Russia-Ukraine situation has not changed much recently,
as the market place views it.  While tensions are still high
in the region, traders and investors have become numb to the
matter. Such is evident by rallying world stock markets,
including U.S. indexes hitting all-time highs Monday. It
will take a major new development in the situation to shake
the market place out of its malaise regarding the Ukraine-
Russia conflict—which is likely to occur at some point down
the road.

U.S. economic data due for release Tuesday includes the
weekly Johnson Redbook and Goldman Sachs retail sales
reports, the NFIB small business optimism index, import and
export price indexes, retail sales, and manufacturing and
trade inventories.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine
tensions are still elevated, but the market place is
becoming numb to the matter now.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge
investor risk appetite in the world market place each day.
Each day I assess the “risk-on” or “risk-off” trader
mentality in the market place with a numerical reading of 1
to 10, with 1 being least risk-averse (most risk-on) and 10
being the most risk-averse (risk-off), and 5 being neutral.

–Jim
 
U.S. STOCK INDEXES

S&P 500 June e-mini futures: Prices are firmer and poked to
a new record high in early U.S. trading. Bulls are in firm
near-term technical control. The shorter-term moving
averages (4-, 9- and 18-day) are bullish early today. The 4-
day moving average is above the 9-day. The 9-day is above
the 18-day moving average. Short-term oscillators (RSI, slow
stochastics) are bullish early today. Today, shorter-term
technical resistance comes in at 1,900.00 and then at
1,910.00. Buy stops likely reside just above those levels.
Downside support for active traders today is located at
1,886.00 and then at 1,775.00. Sell stops are likely located
just below those levels. Wyckoff’s Intra-day Market Rating:
6.0

Nasdaq index futures: Prices are firmer and hit a five-week
high early today. The bulls have the near-term technical
advantage. 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
to bullish early today. Shorter-term technical resistance is
seen at 3,625.00 and then at 3,650.00. Buy stops likely
reside just above those levels. On the downside, short-term
support is seen at 3,600.00 and then at 3,575.00. Sell stops
are likely located just below those levels. Wyckoff’s Intra-
Day Market Rating: 6.0.

Dow futures: Prices are firmer in early U.S. trading and hit
a record high overnight. Buy stops likely reside just above
technical resistance at 16,700 and then at 16,750. Sell
stops likely reside just below technical support at Monday’s
low of 16,600 and then at 16,540. 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 to bullish early today.
Wyckoff’s Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today. Bulls 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 below the 9-day. The 9-day is above
the 18-day moving average. Oscillators (RSI, slow
stochastics) are neutral early today. Shorter-term
resistance lies at the overnight high of 135 21/35 and then
at 136 even. Buy stops likely reside just above those
levels. Shorter-term technical support lies at Monday’s low
of 135 5/32 and then at 135 even. Sell stops likely reside
just below those levels. Wyckoff’s Intra-Day Market Rating:
5.5
 
June U.S. T-Notes: Prices are near steady early today.
Bulls 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 neutral to
bearish early today. Shorter-term resistance lies at the
overnight high of 124.27.0 and then at 125.00.0. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at the overnight low of 124.21.5 and
then at 124.16.0. Sell stops likely reside just below those
levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The June U.S. dollar index is higher in early trading and
hit a six-week high. Bulls have good upside momentum to
suggest a market bottom is in place. Slow stochastics for
the dollar index are bullish early today. The dollar index
finds shorter-term technical resistance at the overnight
high of 80.285 and then at 80.500. Shorter-term support is
seen at the overnight low of 79.920 and then at Monday’s low
of 79.840. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

June Nymex crude oil prices are firmer in early U.S. trading
and hit a two-week high. Bulls have some upside momentum. In
June Nymex crude, look for buy stops to reside just above
resistance at the overnight high of $101.44 and then at
$102.00. Look for sell stops just below technical support at
$101.00 and then at the overnight low of $100.36. Wyckoff’s
Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed in overnight trading. Monday’s USDA crop
progress reports showed good corn planting progress last
week. However, wet weather this week in the U.S. Corn Belt
is supportive for corn futures. Soybean trading has turned
choppy but the bulls still have the overall near-term
technical advantage. Wheat bulls still have the chart
advantage, and forecasts for freezing overnight temperatures
in the U.S. Plains states later this week are bullish for
wheat futures.