OVERNIGHT/EARLY MORNING DEVELOPMENTS

The feature overnight was a modest rebound in metals and crude oil futures prices, after heavy selling pressure Tuesday. All commodity markets will be closely watching gold and crude again today. The U.S. stock indexes are higher in early electronic trading. The U.S. dollar is lower versus the major currencies in very early U.S. trading. U.S. Treasury Bonds are modestly lower in early dealings. Grains were narrowly mixed in overnight electronic trading. There was no major market-moving geopolitical news overnight.

U.S. ECONOMIC REPORTS/EVENTS

On tap today is the Consumer Price Index report and weekly U.S. DOE energy stocks data. Fed governor Bies speaks today, as does Dallas Fed president Fisher and Boston Fed president Minehan.

U.S. STOCK INDEXES

The indexes were higher in early morning electronic trading, in a tepid bounce from losses Tuesday. The bears still have solid near-term technical power and are still looking for more on the downside in the near term.

September S&P 500: The shorter-term moving averages (9- and 18-day) are still 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. One early clue that the market may be set for a decent recovery would be if the 4-day crossed back above the 9-day moving average. Today, key shorter-term technical support comes in 1,231.80–the overnight electronic low. Sell stops likely reside just under that level. More sell stops likely reside under shorter-term support at 1,225.00. Shorter-term upside resistance for active traders today is at 1,245.00 and then at 1,250.00. Buy stops are likely located just above those price levels. Slow stochastics are still signaling a market that is now oversold, and the RSI did so Tuesday.

September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still 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 Tuesday’s low of 1,530.00. Sell stops likely reside below that level, and then below support at 1,520.00. On the upside, short-term resistance is seen at Tuesday’s high of 1,555.00 and then at 1,577.00. Light buy stops are likely located just above each of those levels. Slow stochastics and the Relative Strength Index show a market that is short-term oversold and due for a corrective bounce.

September Dow: Prices Tuesday closed at the lowest closing level in four months. Today, sell stops likely reside just below Tuesday’s low of 10,775. The market is still oversold on a short-term technical basis and due for an upside bounce very soon. Both slow stochastics and the RSI are in oversold territory. Buy stops likely reside just above shorter-term technical resistance at Tuesday’s high of 10,950. 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. An early bullish clue would be if the 4-day moved back above the 9-day moving average.

U.S. TREASURY BONDS AND NOTES

Both notes and bond prices were slightly lower in overnight trading in Chicago. A weaker U.S. dollar and concern ahead of today’s CPI report limited buying interest overnight. Today’s CPI report will be very closely watched. The bulls still have some good shorter-term technical momentum. Technical odds have increased 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. The 4-day moving average is above the 9-day average. Both the 4-day and 9-day are above the 18-day. However, the slow stochastics indicator is still into oversold territory, suggesting a near-term downside correction is imminent. Shorter-term resistance lies at Monday’s and last week’s high of 108 16/32 and then at 108 20/32. Buy stops likely lie just above those levels. A push below support at Tuesday’s low of 107 31/32 would provide the bears with some fresh shorter-term downside technical momentum. Light sell stops likely reside just below that level.

September U.S. T-Notes: Prices are weaker in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term resistance at Tuesday’s and 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. However, slow stochastics show the market as still being short-term overbought and due for a downside correction soon. A move in prices below shorter-term support at last week’s low of 105.20.0 would likely uncover sell stops. More stops likely reside just under support at last week’s low of 105.14.0.

CURRENCIES

The September U.S. dollar index is weaker in early morning electronic dealings and the currencies are stronger. The dollar index today may see a corrective pullback from recent gains. But dollar index bulls still have near-term technical momentum, while the Euro bears have the same. The September U.S. dollar index hit a fresh six-week high Tuesday and finds key shorter-term technical resistance at Tuesday’s high of 86.08 and then at 86.50. Shorter-term support is seen at the overnight low of 85.65 and then at 85.48–Tuesday’s low. The September Euro today finds heavier sell stop orders are likely located at shorter-term technical support at Tuesday’s low of 1.2609 and then at 1.2585. Shorter-term technical resistance for the Euro is seen at the overnight high of 1.2683 and then at 1.2700 and then at 1.2766. Light buy stops likely reside just above those shorter-term resistance levels.

METALS

The metals are firmer in early morning dealings, on a tepid bounce from huge losses Tuesday. Gold closed below major psychological support at $600.00 an ounce, which is one clue that a near-term top is in place. Serious near-term chart damage has been inflicted on gold, including more Tuesday. However, in overnight trading prices dropped to a low of $546.40, but have made a strong recovery from that low and are trading near the overnight high. This sets the stage for a potential selling “exhaustion tail” to occur on the daily bar chart today, whereby selling interest dries up at lower price levels and prices rebound strongly. Today’s price action will be extra important for traders. A strongly higher close today would suggest a near-term low is in place. In August gold, prices would have to push and close back above solid resistance at $600.00 to give the bulls a bit of fresh technical momentum. Key shorter-term technical support for August gold today is the overnight electronic low of $546.40. Heavy sell stops likely reside just below that level. Buy stops likely reside just above shorter-term resistance at $580.00, and then above $590.00.

ENERGIES

Prices are firmer in early electronic dealings, following strong losses Tuesday. In July crude, look for buy stops to reside just above resistance $69.00 and then at $70.00. Look for sell stops just below shorter-term support at $68.00. If prices close solidly higher today, then 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. But 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 narrowly mixed in overnight electronic trading. Grain traders will be watching the outside markets–especially gold–again today, as well as closely watching the skies in the Corn Belt. Weather forecasts for the Corn Belt are not quite as bullish as earlier this week, but they still favor the bullish camp with hotter temps. I would not be surprised to see some bargain hunters step in to buy at lower price levels today, as we are in the first weather market of the summer.