* Latest Market Developments *

In overnight news, European stock markets and the Euro currency rallied due in part to an upbeat German ZEW economic expectations index for November that handily beat market expectations. The index was forecast to come in at 0.9 but posted a reading of 11.5. In October the ZEW index came in at -3.6. European equities also saw buying support after European Central Bank chief Mario Draghi reiterated on Monday that the ECB could purchase EU government bonds (quantitative easing), if necessary.

In Japan, Prime Minister Abe called for snap elections as he announced a delay in a sales tax increase measure by 18 months. It was reported Monday that Japan’s economy has slipped into recession following a third-quarter GDP report that showed contraction in Japan’s economy. The Japanese stock market was lifted on the Abe news.

Gold prices are sporting solid gains Tuesday morning, amid the weaker U.S. dollar index on this day, and on news that India’s gold exports are increasing and hit the highest level in over a year in October. However, reports Tuesday also said the Indian government could soon announce a plan to reduce gold imports in order to improve the trade deficit.

The key “outside markets” find January Nymex WTI crude oil prices are firmer on short covering in a bear market. Meantime, the U.S. dollar index is solidly lower on some profit taking from recent gains.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the producer price index, Treasury international capital data, and the NAHB housing market index.

(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 still-simmering Russia-Ukraine conflict could be the next geopolitical hotspot to escalate.)

(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 near steady in early trading and hovering near the recent record high. 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 neutral early today. Today, shorter-term technical resistance comes in at last week’s high of 2,036.00 and then at 2,050.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,018.00 and then at 2,010.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are firmer in early trading and hovering near last week’s 14-year high. 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 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 4,200.00 and then at Monday’s low of 4,192.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

Dow futures: Prices are near steady in early U.S. trading and hovering not far below last week’s record high. Buy stops likely reside just above technical resistance at Monday’s high of 17,640 and then at last week’s high of 17,660. Sell stops likely reside just below technical support at 17,600 and then at Monday’s low of 17,570. 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: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady early today. Bulls and bears are on a level near-term technical playing field amid recent choppy trading. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 140 6/32 and then at 140 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 139 23/32 and then at 139 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 March U.S. T-Notes: Prices are near steady in early trading. Bulls and bears are on a level near-term technical playing field. 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 neutral to bullish early today. Shorter-term resistance lies at the overnight high of 125.29.5 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.20.0 and then at 125.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is lower in early trading, on some profit taking. Prices are still 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 88.155 and then at Monday’s high of 88.225. Shorter-term support is seen at the overnight low of 87.780 and then at 87.640. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

January Nymex crude oil prices are near steady in early U.S. trading and hovering just above the recent four-year low. Bears remain in solid overall near-term technical control. Look for buy stops to reside just above technical resistance at the overnight high of $76.48 and then at $77.00. Look for sell stops just below technical support at the overnight low of $75.20 and then at Monday’s low of $74.75. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Grain futures markets were mixed in overnight trading. The key “outside markets” are neutral to bullish for the grains early today as the U.S. dollar index is lower and crude oil prices are near steady. The grain market bulls are still enjoying price uptrends on the daily bar charts, but need to show more power soon. I will be surprised if the grain markets can extend their recent rallies into the end of this year, given the bearish outside markets.