* Latest Market Developments *
There is a bit more investor and trader risk appetite in the market place at mid-week as there have been no major new developments on the geopolitical scene the past 48 hours. Still the Russia-Ukraine crisis and the Israel-Hamas fighting remain on the front burner of the market place. Many veteran market watchers are surprised there has not been greater risk aversion in the market place amid the heightened geopolitical tensions the past week, or even the past few months. One explanation could be that the industrialized world is so awash in cash following the major central banks of the world pumping monies into the world financial system the past few years. In other words, there’s more money in the world to be thrown at many markets. That certainly appears to be the case in the major world stock indexes, which are hovering near record or multi-year highs. The above postulation also suggests serious price inflation should occur at some point down the road. However, at present there is more concern about deflation, especially in the European Union.
Gold, U.S. Treasuries and the U.S. dollar are safe-haven assets that have been and will likely continue to be supported from the heightened world tensions. I suspect that for the near term, trading action in many markets will day to day swing from risk-on to risk-off, depending on the news headlines of that day.
Traders and investors are looking forward to the next piece of economic data coming out of China—preliminary manufacturing data on Thursday.
U.S. economic data due for release Wednesday is light and includes the weekly mortgage applications survey and the weekly DOE liquid energy stocks report. Wyckoff’s Daily Risk Rating: 7.0 (Russia-Ukraine crisis and Irael-Hamas conflict are still front-burner matters for markets.)
(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 Wyckoff
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are firmer in early trading and hovering near Tuesday’s record high. 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 the record high of 1,980.50 and then at 1,990.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,972.75 and then at Tuesday’s low of 1,965.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are higher in early trading today and hovering near the 14-year high set on Tuesday. 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 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 Tuesday’s 14-year high of 3,961.00 and then at 3,975.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,948.50 and then at 3,935.00. 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 hovering just below the record high. Buy stops likely reside just above technical resistance at the record high of 17,080 and then at 17,100. Sell stops likely reside just below technical support at 17,000 and then at 16,950. 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 firmer early today and hovering near the recent contract high. Bulls still have the firm overall near-term technical advantage on safe-haven demand. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the contract high of 138 27/32 and then at 139 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 138 12/32 and then at 138 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are near steady in early trading. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 125.16.5 and then at 125.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.09.5 and then at this week’s low of 125.02.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early trading on mild profit taking after hitting a five-week high Tuesday. Bulls still have upside momentum on their side. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 80.925 and then at 81.000. Shorter-term support is seen at 80.755 and then at Tuesday’s low of 80.610. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
September Nymex crude oil prices are slightly higher in early U.S. trading. Bulls still have some upside momentum. In September Nymex crude, look for buy stops to reside just above resistance at the $103.00 and then at this week’s high of $103.45. Look for sell stops just below technical support at the overnight low of $101.79 and then at this week’s low of $101.48. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were narrowly mixed in overnight trading on tepid short covering in bear markets. Not much new in these markets. Weekly USDA crop progress reports show very good corn and soybean crop conditions, overall. Weather is nearly ideal with no extended hot or dry weather in the extended forecasts. There continues to be talk of record corn and soybean yields this year. Bears also remain in firm technical command of the grain futures markets, and have gained downside momentum this week.
