OVERNIGHT/EARLY MORNING DEVELOPMENTS

The U.S. stock indexes are modestly higher in early electronic trading. The U.S. dollar is slightly higher versus the major currencies in very early U.S. trading, gold is trading modestly lower, crude oil is modestly higher and U.S. Treasury Bonds are steady in early dealings. Grains were solidly higher in overnight electronic trading. There was no major market-moving news overnight or over the weekend.

U.S. ECONOMIC REPORTS/EVENTS

On tap today, Cleveland Fed president Pianalto speaks, as does Dallas Fed president Fisher and Fed governor Olson and Fed governor Bies. Fed chairman Bernanke also speaks this evening. It’ll be a “Fed speak” day today. No U.S. economic reports are due out today

U.S. STOCK INDEXES

The indexes were slightly higher in early morning electronic trading. Bulls are trying to recover from a recent beating. Bulls are a bit encouraged that price action in the indexes last week could have seen the sellers become exhausted. But bulls need to show some power early this week, or it could be an ugly summer for them. I don’t look for strong downside price pressure from present levels.

September S&P 500: The bears still have the shorter-term technical advantage. The shorter-term moving averages (9- and 18-day) are bearish. The 4-day moving average is below the 9- and 18-day average, but the 9-day is even with the 18-day moving average. Today, key shorter-term technical support comes in 1,259.50–the overnight electronic low. Light sell stops likely reside just under that level. Heavy sell stops likely reside under shorter-term support at last week’s low of 1,266.30. Shorter-term upside resistance for active traders today is Friday’s high of 1,274.20 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 still fully bearish to start the new week. 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 last week’s low of 1,544.00. Heavy sell stops likely reside below that level. On the upside, short-term resistance is seen at Friday’s high of 1,595.00 and then at 1,600.00 and then at the 1,612.00. Light buy stops are likely located just above each of those levels.

September Dow: Prices Friday closed at the weekly low close after Thursday hitting another fresh four-month low. Heavy sell stops likely reside just below last week’s low of 10,840. However, the market is will oversold on a short-term technical basis and I look for an upside bounce today.
Buy stops likely reside just above shorter-term technical resistance at 11,100. Shorter-term moving averages are still 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 near steady in overnight trading in Chicago. However, the bulls have gained some good shorter-term technical momentum. Technical odds have increased that a near-term low is in place. My bias is that a near-term low is in place.

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 last week’s high of 108 12/32. Solid buy stops likely lie just above that level. A push below support at last 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 steady in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term resistance at last week’s high of 106.03.5. Shorter-term moving averages are still 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 last 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 higher in early morning electronic dealings and the currencies are lower. Dollar index bulls have fresh near-term technical momentum to start the week, while the Euro bears have the same, after last week’s price action. The September U.S. dollar index now finds key shorter-term technical resistance at 86.00 and then at 86.50. Shorter-term support is seen at 85.36–Friday’s low–and then at 85.00. The September Euro today hit a fresh six-week low. The Euro finds sell stops are likely located at shorter-term technical support at 1.2650 and then at 1.2600. Shorter-term technical resistance for the Euro is seen at 1.2700 and then at 1.2766. Light buy stops likely reside just above those shorter-term resistance levels.

METALS

The metals are weaker in early morning dealings, on a continuation of the recent price downtrend. Serious near-term chart damage was inflicted last week. There are now technical clues that 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 overnight electronic low of $607.00. Solid sell stops likely reside just below that level. A close below major psychological support at $600 would produce major near-term chart damage, and heavy sell stops lie below that level. Buy stops likely reside just above shorter-term resistance at $625.00.

ENERGIES

Prices are near steady in early electronic dealings. In July crude, look for buy stops to reside just above resistance at the overnight electronic high of $72.32 and then at $73.00. Look for sell stops just below shorter-term support at $71.00. Same story, which has been playing out: 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.

GRAINS

Prices were solidly higher in overnight electronic trading, on short covering and fresh speculative buying as weather models are now calling for hotter and drier weather in the Corn Belt in the coming days. This is a significant shift–and a more bullish shift–from the weather models Friday at midday. Technicals had turned more bearish with Friday’s closes, but it’s important to remember that summertime weather markets find near-term technicals less reliable than usual. In fact, summertime weather markets in the grains can make for very sloppy daily charts.