Tuesday, August 13–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The market place is awaiting a slew of U.S. economic data being released this week, starting out with retail sales on Tuesday. Many believe this week’s U.S. data will show an improving U.S. economy, one that is possibly strong enough to begin to wean it from the Fed’s monthly bond-buying program, also known as quantitative easing. In the European Union industrial output rose by 0.7% from May to June.  In the second quarter, output was up 1.1% from the first quarter. The closely watched German ZEW economic expectations index for August came in at 42.0 versus 36.3 in July. The data hints the Euro zone economy is also on the upswing. Recent news reports cite a significant increase in demand for physical gold coming out of China. Demand for gold from Chinese consumers hit a record of 385.5 metric tons in the second quarter, according to a Chinese trade group. The reports also said China is poised to take over leadership from India as the world’s leading consumer of gold. Consumer demand for physical gold from India is also on the upswing, the reports said. Also, India has again raised its import taxes on gold and silver in an effort to curb its current-account deficit. U.S. economic data due for release Tuesday includes the retail sales report, the NFIB index of small business optimism, the weekly Goldman Sachs and Johnson Redbook retail sales reports, import and export prices, manufacturing and trade inventories and sales. Atlanta Fed president Dennis Lockhart also speaks at a Kiwanis meeting Tuesday.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer early today. Bulls still have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 1,693.90 and then at the record high of 1,705.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,686.90 and then at Monday’s low of 1,675.40. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today. The bulls still have the overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at the overnight high of 3,137.50 and then at the recent high of 3,140.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,123.25 and then at 3,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer early today. Bulls have the near-term technical advantage. Buy stops likely reside just above technical resistance at 15,470 and then at 15,500. Sell stops likely reside just below technical support at 15,400 and then at 15,350. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is above 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 lower early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 133 29/32 and then at 134 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 6/32 and then at 133 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 September U.S. T-Notes: Prices are lower early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 126.16.5 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.03.5 and then at 126.00.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The September U.S. dollar index is higher in early U.S. trading, on more short covering. Bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 81.750 and then at 82.000. Shorter-term support is seen at the overnight low of 81.435 and then at Monday’s low of 81.110. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

Crude oil prices are slightly higher early today. Bulls have the overall near-term technical advantage. In September Nymex crude, look for buy stops to reside just above resistance at the overnight high of $107.20 and then at $108.00. Look for sell stops just below technical support at the overnight low of $105.95 and then at $105.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were firmer in overnight trading. Grain traders are still digesting the surprising results of Monday’s monthly USDA supply and demand report. The government forecast the size of the U.S. corn and soybean crops at lower levels than a month ago. Most traders had reckoned the USDA would slightly raise the size of the U.S. corn crop. Given Monday’s upside price action in corn and soybeans, gains in those markets today would suggest they have put in at least near-term lows, if not major lows. Wheat will remain a follower. Dry weather in parts of the U.S. Corn Belt is also a bullish input for corn and soybeans.