* Latest Market Developments *

Asian and European stock markets posted sharp gains Friday, following Wall Street’s lead from Thursday. The world stock markets’ euphoria is stemming from dovishly construed FOMC meeting results on Wednesday. There are also ideas the European Central Bank will soon announce further monetary policy stimulus measures, which helped to boost the European equities. An upbeat German consumer sentiment report Friday also helped the European stock market bulls.

U.S. stock indexes in early, pre-opening trading were seeing modest follow-through buying strength following Thursday’s big gains.

The Bank of Japan on Friday left its monetary policy unchanged at its regular meeting, which was expected. The BOJ also said plunging oil prices will not negatively impact the BOJ’s efforts to fend off deflationary price pressures in the moribund Japan economy.

The market place is still closely monitoring price movement of the Russian ruble, which has stabilized late this week. The ruble dropped sharply earlier this week and hit a record low versus the U.S. dollar. The Russian central bank on Tuesday implemented a big interest rate increase and Russian officials pledged to sell foreign currency reserves to defend the ruble, which have somewhat eased pressure on the Russian currency. However, there are still worries the deflating ruble could cause a secondary-currency contagion. 

Nymex crude oil futures prices are firmer Friday morning on a short-covering bounce after closing at a five-year low close on Thursday. The U.S. dollar index is higher and hovering near a five-year high.

U.S. economic data due for release Friday is light and includes the Kansas City Fed manufacturing survey.

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

Wyckoff’s Daily Risk Rating: 6.0 (Geopolitical risk assessment has faded a bit Thursday, but risks have certainly not evaporated.)

(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 and poked to a new record high in early trading. Bulls have quickly regained upside momentum. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-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 record high of 2,073.75 and then at 2,085.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,058.00 and then at 2,050.00. 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 the bulls have quickly regained good upside momentum. Shorter-term moving averages (4- 9-and 18-day) are still 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 the overnight high of 4,290.00 and then at 4,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,267.50 and then at 4,250.00. 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 the bulls have made a dramatic rebound late this week. Buy stops likely reside just above technical resistance at 17,850 and then at 17,900. Sell stops likely reside just below technical support at 17,726 and then at 17,700. Shorter-term moving averages are still 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 bullish 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 more profit taking after hitting a contract high Tuesday. Bulls are fading but still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still 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 the overnight high of 143 22/32 and then at 144 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 143 3/32 and then at 142 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 March U.S. T-Notes: Prices are weaker in early trading and seeing more profit taking after hitting a two-month high on Tuesday. Bulls still have the slight overall near-term technical advantage but are fading. 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 126.20.0 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.09.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly higher in early trading. Bulls have the solid overall near-term technical advantage. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 89.695 and then at the contract high of 89.785. Shorter-term support is seen at the overnight low of 89.400 and then at Thursday’s low of 89.120. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

January Nymex crude oil prices are higher in early U.S. trading and seeing short covering in a bear market. Prices closed at a five-year low close on Thursday. Bears remain in solid overall near-term technical control amid still no early clues of a market bottoming being close at hand. Look for buy stops to reside just above technical resistance at $56.00 and then at $57.00. Look for sell stops just below technical support at $54.00 and then at this week’s low of $53.60. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Grain futures markets were lower in overnight trading, on some profit taking in corn and wheat, and continued choppy and sideways price action in soybeans. Wheat has led gains this week. Corn and bean market bulls have some upside near-term technical momentum heading into the end of the year, but soybeans are the weak sister at present.