*OVERNIGHT DEVELOPMENTS*

The big feature in the market place Friday morning is plunging crude oil prices following Thursday’s much-anticipated OPEC oil cartel meeting. The cartel decided to leave its daily collective output quota unchanged, at 30 million barrels. Crude oil prices dropped sharply overnight on the news, to $67.75 a barrel in January Nymex futures–a four-year low. Many market watchers had reckoned OPEC would at least make a small cut in its crude oil output. Crude oil’s price drop has had a significant impact on many other markets. The U.S. dollar index is sharply higher, while the Russian ruble hit another all-time low versus the U.S. dollar. World oil stocks were hit sharply to the downside on the OPEC news.

U.S. stock indexes traded mixed in pre-U.S. market open trading. Gold and most other commodity markets were under selling pressure, following their sector leader, crude oil.  U.S. Treasury prices were posting good gains in early dealings Friday.

While falling crude oil prices is good news for consumers and some stocks like the airlines, the general view of the market place is that the steep downdraft in oil prices is potentially destabilizing. One keen uncertainty is how Russian president Vladimir Putin will eventually react to the economic sanctions and sharply lower crude oil prices that have crippled his economy. Putin still has a very powerful military and still is the guy who has his finger on the button of a big nuclear arsenal.

In other overnight news, the European Union’s November consumer price index came in at up 0.3%, year-on-year, versus a reading of up 0.4% in October. The reading was in line with market expectations but corroborates the uneasy feelings about price deflation becoming a very serious problem in the EU.

There is no major U.S. economic data due for release Friday.

(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.)

(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 slightly lower in early trading, on profit taking, but hovering not far below this week’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 and 18-day. The 9-day is above 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 record high of 2,068.00 and then at 2,075.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,050.00 and then at 2,043.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are firmer in early trading and hit another 14-year high overnight. 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 the overnight high of 4,331.50 and then at 4,350.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,314.00 and then at 4,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

Dow futures: Prices are slightly lower in early U.S. trading but are just below last week’s record high. Buy stops likely reside just above technical resistance at the record high of 17,865 and then at 17,900. Sell stops likely reside just below technical support at Wednesday’s low of 17,775 and then at 17,745. Shorter-term moving averages are 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 higher early today and hit a six-week high overnight. Bulls have the near-term technical advantage and are gaining upside momentum. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 142 19/32 and then at 143 even. Buy stops likely reside just above those levels. Shorter-term support lies at 142 even and then at the overnight low of 141 25/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 March U.S. T-Notes: Prices are higher and hit a five-week high in early trading. Bulls have the 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 bullish early today. Shorter-term resistance lies at the overnight high of 127.00.0 and then at 127.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.21.0 and then at 126.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The March U.S. dollar index is higher in early trading and hovering not far below the recent contract and four-year high. Bulls 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 88.475 and then at the contract high of 88.800. Shorter-term support is seen at the overnight low of 88.195 and then at 88.000. Wyckoff’s Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

January Nymex crude oil prices are sharply lower and hit a four-year low in early U.S. trading. Bears remain in strong overall near-term technical control. Look for buy stops to reside just above technical resistance at $70.00 and then at $71.00. Look for sell stops just below technical support at the overnight low of $67.75 and then at $67.00. Wyckoff’s Intra-Day Market Rating: 2.0

GRAINS

Grain futures markets were closed in overnight trading, but are expected to open lower amid the very bearish “outside markets”—lower crude oil prices and a higher U.S. dollar index. The grain market bulls have shown resilience as the corn and soybean bulls have re-established near-term price uptrends. Wheat also sees a near-term price uptrend in place. Focus has turned to worldwide demand and the prospects for the South American corn and soybean crops. Given the bearish “outside market” forces working against the grains, trading in the grain futures markets could be choppy and sideways into the end of the year.