Wednesday, August 7–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

In overnight news, German industrial production rose by 2.4% in June from May, following a 0.8% decline in May. The growth rate was forecast at up 0.3% on the month. This latest report continues a recent string of upbeat German economic data that suggests the European Union’s largest economy is well on its way to recovery. The Bank of England said Wednesday in its quarterly inflation report that it will keep its interest rates ultra-low and keep purchasing gilts until the U.K’s unemployment rate drops to 7%. However, BOE governor Mark Carney would not promise rates would not rise in the coming few years. The British stock market dropped on Carney’s remarks. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and consumer installment credit.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are weaker early today on mild profit taking. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,693.20 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 1,677.00 and then at 1,670.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly lower early today on mild profit taking. The bulls still have the solid overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at the overnight high of 3,119.50 and then at this week’s high of 3,140.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,100.00 and then at 3,075.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.

Dow futures: Prices are weaker early today on mild profit taking. Bulls still have the solid near-term technical advantage. Buy stops likely reside just above technical resistance at 15,500 and then at this week’s high of 15,573. Sell stops likely reside just below technical support at 15,400 and then at 15,345. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer early today on short covering. 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 and 18-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 133 21/32 and then at this week’s high of 133 28/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 6/32 and then at this week’s low of 132 25/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are slightly higher early today on short covering. Bears still 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 neutral early today. Shorter-term resistance lies at this week’s high of 126.20.5 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 126.06.0 and then at 126.00.0 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 slightly lower in early U.S. trading. 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 81.880 and then at this week’s high of 82.160. Shorter-term support is seen at the overnight low of 81.530 and then at last week’s low of 81.480. Wyckoff’s Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

Crude oil prices are near steady early today. Bulls have the overall near-term technical advantage. However, if prices back off this week a bearish double-top reversal pattern would form on the daily bar chart. In September Nymex crude, look for buy stops to reside just above resistance at $106.00 and then at $106.50. Look for sell stops just below technical support at this week’s low of $104.86 and then at $104.00. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed in overnight trading. Not much new. The grain market bears remain in solid technical command. The U.S. Corn Belt weather remains non-threatening for the corn and soybean crops, which is bearish. The next major data points for the grain markets are likely to be the monthly USDA supply and demand report, out next week, and the Pro Farmer Midwest crop tour in late-August. My bias is that the downside is somewhat limited in the grain markets, what with prices beaten down hard recently.