The U.S. stock indexes were weaker in overnight electronic trading

OVERNIGHT/EARLY MORNING DEVELOPMENTS

The U.S. stock indexes were weaker in overnight electronic trading. The U.S. dollar is firmer versus the major currencies in early trading, gold is moderately higher, crude oil is higher and U.S. Treasury Bonds are steady in early dealings. Grains were higher in overnight electronic trading. There were no major geopolitical news events that occurred overnight.

Friday, May 26–Jim Wyckoff’s Early Morning Web Log

U.S. ECONOMIC REPORTS

On tap today are personal income and spending data and the University of Michigan consumer sentiment survey. Some markets, including the bond market, close early today ahead of the Memorial Day holiday weekend. U.S. markets are closed Monday.

U.S. STOCK INDEXES

The indexes were weaker in overnight electronic trading but then turned higher early this morning. Prices saw a good short-covering bounce Thursday, and if weekly high closes can be scored in the indexes today, then that would be an early clue that near-term lows could be in place. Serious near-term technical damage has been inflicted on the stock indexes recently. 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 bearish. However, the 4-day moving average is now poised to push above the 9-day and produce a minor buy signal. That could occur today. Key shorter-term technical support today the 1,266.00 level. Sell stops likely reside under this price level. Sell stops are also likely located just below chart support at Thursday’s low of 1,258.00. Key upside resistance for active traders today is the 1,280.00 level. Buy stops are likely just above that price level. Look for quieter, pre-holiday trading today.

June Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still bearish, but it appears the 4-day will cross above the 9-day today to produce a minor buy signal. Key shorter-term technical support for today is 1,580.00–Wednesday’s low. Sell stops likely reside below that level. On the upside, short-term resistance is seen at the 1,620.00 level. Buy stops are likely located just above that level. I look for some more short-covering support to limit losses in the market today.

June Dow: This index hit a fresh two-month low Wednesday, but has rebounded on short covering. Bulls look strong to end the week, which hints that a near-term low is in place. Sell stops likely reside just below shorter-term chart support at 11,200. Buy stops likely reside just above shorter-term technical resistance at 11,300.

U.S. TREASURY BONDS AND NOTES

Both notes and bond prices were steady in overnight trading, but turned slightly higher after the personal income report was issued this morning. But bears are still in overall technical control of both bonds and notes. Rallies are still selling opportunities at this point.

June U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are now turning bearish. The 4-day moving average today is poised to move below the 9-day average. The next short-term upside price objective for the bears today is pushing prices above shorter-term resistance at 107 even. Buy stops likely lie just above that level. A push below support 106 16/32 would provide the bears with fresh short-term downside technical momentum. Sell stops likely reside below that level.

June U.S. T-Notes: Prices are steady in early dealings. Buy stops do likely reside just above shorter-term resistance at 105.24.0. Shorter-term moving averages are now turning bearish. The 4-day moving average is poised to move below the 9-day average. A move in prices below shorter-term support at 105.10.0 likely would uncover some sell stops.

CURRENCIES

The June U.S. dollar index is near steady in early morning dealings and the currencies are mostly near unchanged, too. The DX and the currencies appear to be in a “pause” mode, which suggests the prevailing price trends are still sound and about to continue–down for the DX and up for the other currencies. But price action has become choppier. The June U.S. dollar index finds key shorter-term technical support at 84.50 and resistance at 85.07. Key shorter-term technical support in the June Euro today is the 1.2800 level. Sell stops likely reside just below that level. Resistance for the Euro is seen at 1.2855. Buy stops likely reside just above that level.

METALS

The metals are modestly higher in early morning dealings, following good gains Thursday. Bulls have made a good recovery this week in the metals, with this week’s lows very strong technical support. Bulls appear to be finishing the week in strong fashion. Key shorter-term technical support for June gold today is this week’s low of $636.00 level. Heavy sell stops likely reside just below that level, while buy stops likely reside just above shorter-term resistance at $660.00 in June gold.

ENERGIES

Prices are weaker in early electronic dealings, following big gains Thursday. In July crude oil, look for buy stops to reside just above resistance at $71.70. Look for sell stops just below support at $69.50. I still 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 higher in overnight electronic trading. Bulls look to get off to a strong start today, but key will be how the markets close. Today’s price action will be extra important heading into the long holiday weekend. Heat is building back into the Corn Belt, which is short-term bearish for corn and beans, but could be longer-term bullish. It still would not surprise me to see weakness in grains into early July–especially if weather remains benign. However, 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.