Friday, August 27--Jim Wyckoff's Morning Web Log

Note: I am out of the office today and my friend and fellow trader/analyst Ken Seehusen produced my morning report. The format is a bit different. but I think you'll enjoy Ken's style, too. Jim

The STOCK INDEXES & MARKETS

The September NASDAQ 100 was higher overnight due to short covering. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If September extends this month's decline, July's low crossing at 1698.00 is the next downside target. Closes above the 20-day moving average crossing at 1842.20 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 1805.75. Second resistance is the 20-day moving average crossing at 1842.20. First support is Wednesday's low crossing at 1756.75. Second support is July's low crossing at 1698.00. The September NASDAQ 100 was up 7.75 pts. at 1775.25 as of 5:52 AM CST. Overnight action sets the stage for a higher opening by September NASDAQ 100 when the day session begins later this morning.

The September S&P 500 index was higher overnight due to short covering. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short-term low might be in or is near. However, closes above the 20-day moving
average crossing at 1087.54 are needed to confirm that a short-term low has been posted. If September extends this month's decline, July's low crossing at 1003.10 is the next downside target. First resistance is the 10-day moving average crossing at 1065.75. Second resistance is the 20-day moving average crossing at 1087.54. First support is Wednesday's low crossing at 1038.00. Second support is July's low crossing at 1003.10. The September S&P 500 Index was up 3.40 pts. at 1048.20 as of 5:54 AM CST. Overnight action sets the stage for a higher opening by the September S&P 500 index when the day session begins later this morning.

INTEREST RATES

September T-bonds were higher overnight as it extends this summer's rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that additional short-term gains are possible. If September extends this year's rally, the 87% retracement level of the 2008-2009-decline on the weekly continuation chart crossing at 138-02 is the next upside target. Closes below the 20-day moving average crossing at 132-02 would confirm that a short-term top has been posted. First resistance is Wednesday's high crossing at 136-31. Second resistance is the 87% retracement level of the 2008-2009-decline on the weekly continuation chart crossing at 138-02. First support is the 10-day moving average crossing at 134-18. Second support is the 20-day moving average crossing at 132-02.

ENERGY MARKETS

October crude oil was higher due to short covering overnight as it consolidates some of this month's decline. Stochastics and the RSI areturning bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing at 77.23 are needed to confirm that a short-term low has been posted. If October extends this month's decline, May's low crossing at 70.35 is the next downside target. First resistance is the 10-day moving average crossing at 74.03. Second resistance is the 20-day moving average crossing at 77.23. First support is Wednesday's low crossing at 70.76. Second support is May's low crossing at 70.35.

CURRENCIES

The September Dollar was steady to slightly higher overnight as it consolidates some of Thursday's decline. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 82.14 would temper the near-term friendly outlook. If September extends this month's rally, the reaction high crossing at 84.73 is the next upside target. First resistance is Tuesday's high crossing at 83.64. Second resistance is the reaction high crossing at 84.73. First support is the 10-day moving average crossing at 82.87. Second support is the 20-day moving average crossing at 82.14.

PRECIOUS METALS

October gold was higher overnight as it consolidates around the 75% retracement level of the June-July decline crossing at 1239.60. Stochastics and the RSI are overbought, diverging but are neutral to bullish hinting that additional strength is possible near-term. If October extends the rally off July's low, the 87% retracement level of the June-July decline crossing at 1253.30 is the next upside target. Closes below the 20-day moving average crossing at 1215.50 would confirm that a short-term top has been posted. First resistance is Thursday's high crossing at 1244.50. Second resistance is the 87% retracement level of the June-July decline crossing at 1253.30. First support is the 10-day moving average crossing at 1231.80. Second support is the 20-day moving average crossing at 1215.50.

GRAINS

December corn was higher overnight as it extends Thursday's rally. Given the strong export demand along with disappointing early harvest results in the southern Corn Belt, traders are becoming concerned that this year's corn crop might fall short of the latest USDA and private corn crop estimates. If these fears are confirmed later this fall, carryout for next year will tighten even further forcing the market to move higher to bid additional corn acres to be planted next spring in the U.S. The high-range close overnight sets the stage for a steady to higher opening when the day session begins. The late-week rally has turned stochastics and the RSI bullish signaling that sideways to higher prices are possible near-term. If December extends the rally off June's low, last fall's high on the weekly chart crossing at 4.52 is the next upside target. Closes below Tuesday's lowcrossing at 4.15 1/4 would confirm that a short-term top has been posted. First resistance is this month's high crossing at 4.38 3/4. Secondresistance is last fall's high on the weekly chart crossing at 4.52. First support is Tuesday's low crossing at 4.15 1/4. Second support is thereaction low crossing at 4.05 3/4.

December wheat was higher due to short covering overnight as it consolidates some of Wednesday's decline. The mid-range close sets the stage for a steady to higher opening when the day session begins trading later this morning. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If December extendsthis month's decline, the 50% retracement level of this summer's rally crossing at 6.70 1/2 is the next downside target. Closes above the reactionhigh crossing at 7.32 would confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 7.21. Secondresistance is the reaction high crossing at 7.32. First support is last Tuesday's low crossing at 6.77 1/2. Second support is the 50% retracement level of this summer's rally crossing at 6.70 1/2.

November soybeans were higher overnight as it extends Thursday's short covering rally. Strong export demand along with concerns over the size ofthis year's soybean crop due to sudden death syndrome are providing support for the late-week rebound. The high-range overnight close sets the stage for a steady to higher opening when the day session begins later this morning. Stochastics and the RSI are oversold and are turning bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 10.20 3/4 would confirm that a short-term low has been posted. If November renews this month's decline, the 38% retracement level of the June-August rally crossing at 9.87 1/4 is the next downside target. First resistance is the 20-day moving average crossing at 10.20 3/4. Second resistance is this month's high crossing at 10.49. First support is Tuesday's low crossing at 9.93 3/4. Second support is the 38% retracement level of the June-August rally crossing at 9.87 1/4.