* Latest Market Developments *

The market place is still very concerned about the Russian ruble’s sharp drop this week, hitting a record low versus the U.S. dollar—despite the Russian central bank on Tuesday implementing a big interest rate increase from 10.5%, to 17%. The reverberations in the world currency markets and financial sector are significant. And there are growing worries the deflating ruble could cause a secondary-currency contagion. The ruble did rebound a bit Wednesday when Russian officials said they would start selling their foreign currency reserves to prop up the beleaguered ruble.

Traders and investors are wondering how Russian president Vladimir Putin will react to the floundering ruble. His economy is in shambles from falling oil prices and western sanctions. But he still controls the world’s second-largest military, and he has shown in recent months he will use that military power to attain his objectives. However, many expert Russia watchers say Putin will probably remain calm as this event plays out.

Traders and investors are also looking to Wednesday’s conclusion of the Federal Reserve Open Market Committee (FOMC) meeting to discuss U.S. monetary policy. Fed chair Janet Yellen holds a press conference after the meeting. Many believe the Fed will slightly change its statement wording to favor the monetary policy hawks—hinting that an interest rate increase will come sooner. The Fed has not raised interest rates in six years.

Crude oil prices are lower in early U.S. trading and hovering near Tuesday’s five-year low of $53.80 a barrel, basis January Nymex futures. Brent crude futures have now fallen below $60.00 a barrel. While such is good news for consumers at the gasoline pumps, the market place has been spooked by crude oil’s steep downdraft.

In other overnight news, the European Union’s consumer price index rose 0.3% in November, year-on-year—for the lowest reading in five years. Month-on-month the CPI was down 0.2% in November from October. The report did nothing to assuage the fears of deflation gaining a grip on the EU economy.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, real earnings and the weekly DOE liquid energy stocks report.

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

Wyckoff’s Daily Risk Rating: 7.0 (Geopolitical risks are back on the front burner of the market place this week—namely the falling value of the Russian ruble in the currency markets.)

(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 higher in early trading, on a corrective upside bounce after hitting a six-week low Tuesday. Bulls have faded to suggest at least a near-term market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below 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 1,990.00 and then at 2,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,961.50 and then at 1,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher in early trading and seeing a bounce after hitting a six-week low on Tuesday. It looks like a market top is in place as the near-term technical posture has deteriorated. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below 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 4,125.00 and then at 4,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,100.00 and then at Tuesday’s low of 4,080.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

Dow futures: Prices are higher in early U.S. trading and seeing a corrective rebound after hitting a six-week low on Tuesday. Bulls have faded badly recently to suggest a market top is in place. Buy stops likely reside just above technical resistance at 17,125 and then at 17,190. Sell stops likely reside just below technical support at 17,000 and then at 16,950. Shorter-term moving averages are bearish early today, as the 4-day moving average is below 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are lower early today on profit taking after hitting a contract high Tuesday. Bulls still have the solid 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 145 16/32 and then at 146 even. Buy stops likely reside just above those levels. Shorter-term support lies at 145 even and then at this week’s low of 144 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 March U.S. T-Notes: Prices are lower in early trading and seeing profit taking after hitting a two-month high on Tuesday. Bulls still have the firm 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 127.20.0 and then at the overnight high of 127.27.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 127.10.0 and then at this week’s low of 127.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The March U.S. dollar index is higher in early trading on a corrective bounce from solid losses seen Tuesday. Bulls have the overall near-term technical advantage but have faded recently. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 88.735 and then at this week’s high of 88.870. Shorter-term support is seen at the overnight low of 88.085 and then at this week’s low of 87.830. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

January Nymex crude oil prices are lower in early U.S. trading and hovering near Tuesday’s five-year low of $53.60. Bears remain in strong overall near-term technical control amid no early clues of a market bottoming being close at hand. Look for buy stops to reside just above technical resistance at $55.00 and then at $56.00. Look for sell stops just below technical support at Tuesday’s low of $53.60 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Grain futures markets were firmer in overnight trading. Wheat is leading gains this week as the Russia worries make traders wonder about wheat exports coming out of the Black Sea region. Grain market bulls still have some upside near-term technical momentum heading into the end of the year. Price uptrends are in place on the daily bar charts for corn and wheat, but soybeans see choppy and sideways trading.