* Latest Market Developments *

(Follow me on Twitter: @jimwyckoff)

In overnight news, Japan reported its gross domestic product declined by 1.6% in the third quarter, year-on-year, versus expectations of a 2.2% increase in growth. Thus, Japan is now in recession. This somewhat surprising news sunk Japan’s Nikkei stock index by 3% Monday, which in turn put downside pressure on most other major world stock markets. Japan’s downbeat GDP data is yet another indication that most of the major world economies are struggling and that tougher times may lie ahead. The outlier in this scenario is the U.S. economy, which is experiencing modest growth, as evidenced by mostly upbeat U.S. economic data released in recent months.

The key “outside markets” are in a bearish posture for most markets, especially the raw commodity markets, to start the trading week Monday. January Nymex WTI crude oil prices are lower and hovering near last Friday’s four-year low. I look for crude oil to bottom out somewhere in the $60s-per-barrel range at some point in the not-too-distant future. Meantime, the U.S. dollar index is higher and is hovering near last week’s four-year high.

U.S. economic data due for release Monday includes the Empire State manufacturing survey, and industrial production and capacity utilization.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Wyckoff’s Daily Risk Rating: 5.0 (Geopolitical risks have been moved to the back burner of the market place…for now. The Russia-Ukraine conflict might be ready to escalate based on reports this week of a Russian military convoy headed for the Ukraine border.)

(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 March e-mini futures: Prices are weaker in early trading, on modest profit taking after hitting a record high late last week. 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 and 18-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 high of 2,030.00 and then at last week’s high of 2,036.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,019.75 and then at 2,010.00. 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 and hovering near last week’s 14-year high. Mild profit taking is featured. Shorter-term moving averages (4- 9-and 18-day) are still 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 early today. Shorter-term technical resistance is seen at last week’s high of 4,227.00 and then at 4,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,200.00 and then at 4,175.00. 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 and hovering not far below last week’s record high. Buy stops likely reside just above technical resistance at 17,600 and then at last week’s high of 17,660. Sell stops likely reside just below technical support at last week’s low of 17,500 and then at 17,450. Shorter-term moving averages are still bullish early today, as the 4-day moving average is above 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 early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are higher early today and hit a four-week high overnight. Bulls have regained the slight 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 140 26/32 and then at 141 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 140 4/32 and then at 140 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 March U.S. T-Notes: Prices are higher in early trading and hit a three-week high. 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 bullish early today. Shorter-term resistance lies at the overnight high of 126.10.5 and then at 126.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.31.0 and then at 125.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is higher in early trading. Prices are hovering not far below last week’s contract and four-year high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 88.010 and then at 88.250. Shorter-term support is seen at 87.640 and then at the overnight low of 87.425. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

January Nymex crude oil prices are weaker in early U.S. trading and hovering just above Friday’s four-year low. Bears remain in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at $76.00 and then at $77.00. Look for sell stops just below technical support at the overnight low of $74.75 and then at $74.00. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Grain futures markets were lower in overnight trading, on some profit taking and a corrective pullback from recent gains. The key “outside markets” are bearish for the grains early today as the U.S. dollar index is higher and crude oil prices are lower. The grain market bulls are still enjoying price uptrends on the daily bar charts. I will be surprised if the grain markets can extend their recent rallies into the end of this year, given the bearish outside markets. Traders will closely examine today’s weekly USDA export inspections report.