A Bit More Risk-Aversion in Market Place Friday

* Latest Market Developments *

There is a bit of trepidation in the market place Friday morning, heading into a weekend that sees geopolitical tensions still high on at least a couple fronts. The U.S. stated late Thursday that Russian troops or pro-Russia rebels are shooting artillery shells at Ukraine targets from within Russia’s border. Meantime, the Israel-Hamas fighting continues to be intense. I suspect the risk aversion will increase as the day progresses Friday, as Monday morning could find significant new and possibly unsettling developments on the geopolitical front.

In overnight news, the German Ifo business indicator fell to 108.0 in July from 109.7 in June. A reading of 109.4 was expected. The downbeat report was blamed on German companies worrying about the Russia-Ukraine crisis that is playing out at present. The Euro currency saw some selling pressure after the Ifo report’s release.

A feature in the market place this week has been a rally in the U.S. dollar index that pushed the index to a six-week high in overnight trading. The greenback has been supported on safe-haven demand amid the geopolitical tensions, and on some recent upbeat U.S. economic data.

U.S. economic data due for release Friday includes durable goods orders. Wyckoff’s Daily Risk Rating: 7.0 (Russia-Ukraine crisis and Irael-Hamas conflict are still front-burner matters for markets, heading into the weekend.)

(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 weaker in early trading, on mild profit taking after hitting a record high Thursday. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight record high of 1,980.75 and then at the record high of 1,985.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,965.25 and then at this week’s low of 1,959.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are lower in early trading today on profit taking after hitting a 14-year high on Thursday. Shorter-term moving averages (4- 9-and 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at 3,975.00 and then at Thursday’s high of 3,991.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,950.00 and then at 3,925.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices are weaker in early U.S. trading. Buy stops likely reside just above technical resistance at 17,000 and then at Thursday’s high of 17,055. Sell stops likely reside just below technical support at 16,950 and then at this week’s low of 16,912. Shorter-term moving averages are still 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer early today. Bulls still have the firm overall near-term technical advantage amid recent 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 bearish early today. Shorter-term resistance lies at 138 16/32 and then at Thursday’s high of 138 20/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 137 21/32 and then at 137 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are slightly lower in early trading, on mild profit taking. Bulls still have the 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 bearish early today. Shorter-term resistance lies at the overnight high of 125.04.5 and then at 125.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.24.0 and then at 124.20.0. 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 firmer in early trading and hit a six-week high overnight. Bulls 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 the overnight high of 81.065 and then at the June high of 81.170. Shorter-term support is seen at the overnight low of 80.900 and then at 80.800. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

September Nymex crude oil prices are slightly lower in early U.S. trading. Bulls still have the slight near-term technical advantage. In September Nymex crude, look for buy stops to reside just above resistance at $102.50 and then at $103.00. Look for sell stops just below technical support at this week’s low of $101.48 and then at $101.00. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were weaker in overnight trading. Bears continue to rule the month of July with a heavy hand. This is one of the few years in recent memory that there has not even been a hint of a summertime weather scare in the grain markets. The month of August lies ahead and there is still enough growing season left to see a weather scare, especially in soybeans.