Tuesday, August 20–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
While the market place can still be characterized as quieter, summertime trading conditions, the recent sharp drops in the Indian Rupee and the Indonesian Rupiah currencies is becoming an increasing concern to the market place. European stock markets were lower Tuesday, partly on worries about an “Asian contagion” situation that has in the past roiled markets worldwide. Rising interest rates in the major world economies has put pressure on the periphery currencies. The higher rates in the major economies have started to reverse the flows of investor monies that had been moving into the periphery country markets the past few years. Key data points this week will be the Federal Reserve’s FOMC minutes that are released Wednesday and some Chinese economic data on Thursday. Traders will be looking at the minutes for some clarity on the near future path of U.S. monetary policy. There is a world central bankers meeting in Wyoming at mid-week, but Fed Chairman Bernanke will not even attend it and no major proclamations are expected to come out of that event. Traders and investors are still watching the Egypt unrest, which continues to see violence between citizens and government militia. Any escalation in violence is likely to impact the market place, and could prompt a rise in demand for safe-haven assets, including gold. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the Chicago Fed national activity index.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are slightly higher early today and hit another six-week low overnight. The bulls are fading. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Monday’s high of 1,656.50 and then at 1,670.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,641.20 and then at 1,625.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
Nasdaq index futures: Prices are firmer early today after hitting a three-week low Monday. The bulls still have the overall near-term technical advantage but have faded. The shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at 3,090.00 and then at Monday’s high of 3,100.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 3,060.25 and then at 3,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
Dow futures: Prices are slightly higher early today after hitting a six-week low Monday. Bulls have faded. Buy stops likely reside just above technical resistance at Monday’s high of 15,074 and then at 15,110. Sell stops likely reside just below technical support at Monday’s low of 14,980 and then at 14,950. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are higher early today on short covering in a bear market. Prices Monday hit a contract low. Bears still have the solid overall near-term technical advantage. There are no early technical clues of a market bottom being close at hand. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 131 13/32 and then at 132 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130 13/32 and then at the contract low of 130 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are higher early today on short covering in a bear market. Bears still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 125.09.0 and then at 125.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.00.0 and then at the overnight low of 124.21.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is lower in early U.S. trading. The bears have the overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.38 and then at 81.500. Shorter-term support is seen at the overnight low of 80.980 and then at the August low of 80.895. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
October Nymex crude oil prices are lower early today on more profit taking from recent gains. Bulls still have the overall near-term technical advantage. In October Nymex crude, look for buy stops to reside just above resistance at $107.00 and then at the contract high of $107.95. Look for sell stops just below technical support at the overnight low of $105.51 and then at $105.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were lower in overnight trading, on corrective pullbacks from recent gains. A weather market has developed in the grains—especially for soybeans. The western U.S. Corn Belt has seen portions remain very dry for weeks. The solid gains in corn suggest that market has put in a bottom. For soybeans, the strong gains suggest prices can continue to trend sideways to higher in the near term. Wheat will follow the corn market. The Pro Farmer Midwest Crop Tour is in progress and the grain markets will watch daily results.
