Overnight Developments: The U.S. stock indexes were narrowly mixed in overnight electronic trading. The U.S. dollar is firmer versus the major currencies in early trading, gold is solidly lower, crude oil is solidly lower and U.S. Treasury Bonds are solidly higher in early dealings. Grains were mixed in overnight electronic trading. There were no major geopolitical news events that occurred overnight. However, fresh bird flu cases have garnered headlines today.
U.S. Economic Reports: On tap today are durable goods orders, new home sales and the weekly DOE energy report. The DOE report, as usual, will be closely scrutinized heading into the peak U.S. driving season.
U.S. Stock Indexes: The indexes were narrowly mixed in overnight electronic trading. Gains will be limited in the indexes if the commodities suffer general losses today, and that could be the case with gold and crude oil down sharply in overnight trading. Serious near-term technical damage has been inflicted on the stock indexes recently. But I still don’t look for strong price trends to develop in the indexes. More likely is choppier and more sideways trading action heading into the summer months.
June S&P 500: The shorter-term moving averages (4- 9- and 18-day) are still fully bearish and prices are well below the key 100-day moving average. Key technical support today is Tuesday’s fresh six-month low of 1,247.20. Sell stops likely reside under key technical support level. Key upside resistance for active traders today is still the 1,265.00 level. I look for some short-covering support to limit losses in the market today.
June Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still fully bearish and prices are also well below the key 100-day moving average. However, the 14-day RSI is still well into oversold territory (below 30.00), which is one clue that prices could see a corrective bounce today. Key technical support for today is 1,550.00. Sell stops likely reside below that level. On the upside, key short-term resistance is seen at the 1,600.00 level. I look for some short-covering support to limit losses in the market today.
June Dow: This index closed at a fresh two-month low close Tuesday and has been leading the declines in the U.S. stock indexes. I look for the Dow to continue to be the leader on any significant price moves in the index. The Dow is due for an upside corrective bounce and I look for short covering to limit losses today. Key today will be for the bulls to hold technical support at this week’s low of 11,064. Sell stops likely reside just below that level. Bulls would get a technical boost today with a move above short-term resistance at 11,150.
U.S. Treasury Bonds and Notes: Both notes and bond prices were solidly higher in overnight trading and early this morning. “Flight-to-quality” buying was featured due to the sharp losses in crude oil and gold, and the jittery stock markets. Bears are still in overall technical control of both markets, however.
June U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) have now turned fully bullish. The 4-day moving average is above the 9- and 18-day averages, and the 9-day is now above the 18-day. The next short-term downside price objective for the bears is pushing prices below support 106 24/32. Sell stops likely lie below that level. It will take a push above resistance at Monday’s high of 107 26/32 to provide the bulls with fresh upside short-term technical momentum. Buy stops likely reside above that level. First resistance is seen at 107 26/32 and then at 108 even. First support is seen at 107 even and then at 106 24/32 and then at 106 21/32.
June U.S. T-Notes: Bulls look to be strong today. Buy stops do likely reside just above resistance at Monday’s high of 106.00.5. The 4-day moving average has pushed above the 9-day average, and the 9-day has also moved above the 18-day moving average. A move in prices below support at 105.13.5–Tuesday’s low–likely would uncover some sell stops.
Currencies: The June U.S. dollar index is firmer in early morning dealings and the currencies are mostly lower. The recent near-term trends in the major currencies are still in place–down for the DX and up for the other currencies. But price action has become choppier. The June U.S. dollar index finds key short-term technical support at 84.15 and resistance at 85.00. Key support in the June Euro today is the 1.2800 level. Resistance for the Euro is seen at this week’s high of 1.2910. Buy stops likely reside above that level.
Metals: The metals are sharply lower in early morning dealings, with copper futures leading the way. My bias is still that the metals have put in near-term lows with recent price action, and now trade will be choppier. However, a major losses today could produce some near-term chart damage to change my near-term assessment. Today’s price action will be extra important for the near-term market direction. The bull markets are not finished in metals, by any means. Key resistance for June gold today is the $675.00 level. Buy stops likely reside above that level, while sell stops likely reside below support at $650.00 in June gold.
Energies: Prices are sharply lower in early electronic dealings, pressured by the lower metals. Traders are awaiting today’s key DOE stocks data. July crude oil hit a fresh six-week low of $68.17 on Monday, but rebounded strongly from that level. Look for buy stops to reside just above resistance at Tuesday’s high of $72.15. Look for sell stops just below support at $70.00. I don’t look for solid downside price pressure from here. I look for more trading within a range–bound by key near-term support at $68.00 in July crude and solid resistance at $75.00. A drop below the aforementioned trading range–including multiple closes below it–would then likely mean a trading range in crude oil prices between $65.00 and $70.00. It’s very likely going to take another geopolitical market “shock” to move crude above $75.00.
Grains: Prices were mixed in overnight electronic trading–corn and wheat lower, and soybeans firmer. The big declines in crude and gold could hit the grains today–especially wheat, which has seen a good run higher recently. More bird flu in the news today could pressure the soybean complex. I’m still looking to buy significant weakness in soybeans and eventually in corn, but will be patient. Grains will continue to closely track the “outside markets” like crude and gold.
