* Latest Market Developments *

OVERNIGHT DEVELOPMENTS

The much-anticipated stress test results on European Union financial institutions were released over the weekend. While there were some EU banks that failed the tests, overall the results were not deemed threatening to the EU financial system.

There was another downbeat economic report coming out of the EU Monday, as Germany’s Ifo business confidence index came in at 103.2 in October, versus 104.7 in September.

European stock markets were mostly weaker to start the new trading week.

Focus is turning to the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve’s regular meeting Tuesday and Wednesday. As usual, the Wednesday afternoon statement from the FOMC at the conclusion of the meeting will be very closely scrutinized by the market place. Most believe the Fed will formally end its monthly bond-buying program, called quantitative easing.

Attention is also on the two key “outside markets” that impact many other markets: the U.S. dollar and crude oil. The dollar index is slightly lower early Monday, but is hovering not far below its recent four-year high. Meantime, Nymex crude oil prices are lower and hovering near a two-year low. The next downside technical target for nearby crude oil is $75.00 a barrel, which I believe will be reached in the coming weeks.

U.S. economic data due for release Monday includes the U.S. flash services PMI, pending home sales, and the Texas manufacturing outlook survey.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is less anxious heading into the new trading week, following a big gains for the U.S. stock market last week.)

(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 December e-mini futures: Prices are modestly lower in early trading, on a downside correction and mild profit taking from recent strong gains. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,965.75 and then at 1,975.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,950.00 and then at 1,940.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker in early trading on mild profit taking from recent strong gains. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 4,048.00 and then at 4,065.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,015.00 and then at 4,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices are slightly lower in early U.S. trading, on a mild corrective pullback from recent strong gains. Buy stops likely reside just above technical resistance at 16,750 and then at 16,800. Sell stops likely reside just below technical support at 16,700 and then at 16,650. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish early today. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are near steady early today.  Bulls are fading but still have the slight 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 141 28/32 and then at 142 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 141 13/32 and then at last week’s low of 141 7/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 December U.S. T-Notes: Prices are weaker in early trading, on short covering. Bulls still have the slight overall near-term technical advantage but have faded recently. 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 bearish early today. Shorter-term resistance lies at the overnight high of 127.02.0 and then at 127.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.25.5 and then at 126.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The December U.S. dollar index is slightly lower in early trading. Bulls still have the overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 86.050 and then at 86.130. Shorter-term support is seen at the overnight low of 85.540 and then at 85.325. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

December Nymex crude oil prices are weaker early today. Bears are in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at $81.00 and then at the overnight high of $81.29. Look for sell stops just below technical support at $80.00 and then at the October low of $79.10. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Markets were lower in overnight trading. A weekend of very good harvest progress in the U.S. Corn Belt has corn and soybean futures feeling price pressure. Traders will closely examine today’s U.S. grain export inspections report from USDA. Grain market bulls had a good week last week. But don’t look for strong price uptrends to develop soon in the grains, but more likely a sideways grind in the coming weeks.