OVERNIGHT/EARLY MORNING DEVELOPMENTS

The U.S. stock indexes are modestly higher in early electronic trading, on a corrective bounce from losses Thursday. The U.S. dollar is slightly lower versus the major currencies in very early U.S. trading, gold is trading near unchanged, crude oil is modestly higher and U.S. Treasury Bonds are firmer in early dealings. Grains were mostly higher in overnight electronic trading. There was no major market-moving news overnight.

U.S. ECONOMIC REPORTS/EVENTS

On tap today is import price data, trade deficit data and the USDA supply and demand report. Fed chief Bernanke speaks at a graduation ceremony at MIT today. Fed governor Olson also speaks today.

U.S. STOCK INDEXES

The indexes were slightly higher in early morning electronic trading. Price action in the indexes Thursday should be a bit encouraging to the bulls. It appears that the sellers became exhausted at the lows Thursday, and then prices rebounded to close near the session highs. This is one early clue that near-term lows could be in place. Also, the indexes are short-term oversold, technically, and due for at least a short-covering bounce today.

September S&P 500: The bears still have the shorter-term technical advantage. The shorter-term moving averages (9- and 18-day) are fully bearish. The 4-day moving average is below the 9- and 18-day average, and the 9-day is below the 18-day moving average. Today, key shorter-term technical support comes in 1,265.00. Light sell stops likely reside just under that level. More sell stops likely reside under shorter-term support at the 1,260.00 level. Shorter-term upside resistance for active traders today is Thursday’s high of 1,272.00 and then at 1,280.00. Buy stops are likely located just above those price levels.

September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are fully bearish. The 4-day is below the 9-day moving average, and the 9-day moving average is below the 18-day. Today, key shorter-term technical support is located at 1,574.00. Light sell stops likely reside below that level. Heavy sell stops are located under solid technical support at Thursday’s low of 1,544.00. On the upside, short-term resistance is seen at 1,600.00 and then at the 1,612.00. Buy stops are likely located just above those levels.

September Dow: Prices Wednesday hit another fresh four-month low. Heavy sell stops likely reside just below Thursday’s low of 10,840. Buy stops likely reside just above shorter-term technical resistance at Thursday’s high of 11,050. Shorter-term moving averages are fully bearish, showing the 4-day below the 9- and 18-day moving average. The 9-day is also below the 18-day.

U.S. TREASURY BONDS AND NOTES

Both notes and bond prices were steady to firmer in overnight trading in Chicago. The bulls are now gaining some shorter-term technical momentum and weekly high closes today would be one clue that a near-term low is in place, as bonds and notes hit a fresh six-week high Thursday.

September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are still fully bullish, suggesting there could be more upside moves today. The 4-day moving average is above the 9-day average. Both the 4-day and 9-day are above the 18-day. Shorter-term resistance lies at Thursday’s high of 108 12/32. Solid buy stops likely lie just above that level. A push below support at this week’s low of 107 4/32 would provide the bears with some fresh shorter-term downside technical momentum. Sell stops likely reside just below that level.

September U.S. T-Notes: Prices are firmer in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term resistance at Thursday’s high of 106.03.5. Traders may get to trigger those stops today. Shorter-term moving averages are fully bullish. The 4-day moving average is above the 9-day average, and both the 9-day and 4-day are above the 18-day moving average. A move in prices below shorter-term support at this week’s low of 105.14.0 would likely uncover solid sell stops. More stops likely reside just under support at 105.10.0.

CURRENCIES

The September U.S. dollar index is lower in early morning electronic dealings and the currencies are higher. Dollar index bulls have fresh near-term technical momentum, while the Euro bears have the same, after Thursday’s big price moves. The September U.S. dollar index now finds key shorter-term technical resistance at Thursday’s high of 85.60 and then at 86.00. Shorter-term support is seen at 84.90. The September Euro finds sell stops are likely located at shorter-term technical support at 1.2700 and then at 1.2650. Shorter-term technical resistance for the Euro is seen at 1.2800. Light buy stops likely reside just above that shorter-term resistance level.

METALS

The metals are firmer in early morning dealings, on corrective rebounds following big losses Thursday. More chart damage was inflicted Thursday. Weekly low closes in the metals would be a stronger clue that near-term tops are in place. In August gold, prices would have to push and close back above resistance at $643.00 to revive the bulls. Key shorter-term technical support for August gold today is the $608.00 level. Heavy sell stops likely reside just below that level. A close below major psychological support at $600 would produce major near-term chart damage. Buy stops likely reside just above shorter-term resistance at $625.00.

ENERGIES

Prices are firmer in early electronic dealings, on a corrective bounce from recent losses. In July crude, look for buy stops to reside just above resistance at $71.00 and then at $71.50. Look for sell stops just below key support at $70.00. 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. Thursday’s rebound from the session lows to close nearer the session high reinforces that notion. 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.

GRAINS

Prices were mostly higher in overnight electronic trading, on short covering and position evening ahead of today’s USDA reports. There are no big surprises expected in today’s reports. The wheat production figure is expected to be bullish, but that number could already be factored into prices. Still, look for a more active trading day today in the grains. Near-term weather patterns in the Corn Belt are now favoring the bears. Grain traders will continue to closely watch the “outside markets”–gold and crude.