Monday, May 13–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
In overnight news, the U.S. dollar has surged on the world foreign exchange market the past couple trading sessions, which in turn has impacted several other markets. There was a story in the Wall Street Journal on Friday that said U.S. Federal Reserve monetary officials have come up with a strategy to wind down the Fed’s $85 billion-a-month bond-buying program, also known as quantitative easing. That report, which had been rumored to be coming out late last week, added upside price pressure to the U.S. currency in the FOREX market. However, there was no specific timetable for the “QE” exit in the news story, and there have been no other indications by Fed officials, including Fed Chairman Bernanke, that the U.S. central bank will begin to tighten monetary policy any time soon. The greenback hit a four-year high against the Japanese yen Monday, following a weekend Group of Seven finance officials’ meeting in London that failed to criticize Japan and its aggressive easing of its monetary policy. China on Monday reported its industrial production did improve during April, but still came in slightly below trade expectations. Industrial production in China came in at up 9.3%, on an annualized basis, in April. The market expected up 9.5%. Reports from India said demand for physical gold was unimpressive Monday as a major festival approaches. Retailers and analysts said consumer demand for gold is rising about 10% to 15%, when sales usually rise 40% to 50% during the Akshaya Trithiya festival season. The weak Indian rupee currency and a rebound in gold prices from the April low were blamed for the lackluster demand for gold in India. U.S. economic data due for release Monday includes advance retail sales, manufacturing and trade inventories, and the New York Federal Reserve small business credit survey.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are weaker early today and hovering near last week’s all-time high. 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 and 18-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 last week’s record high of 1,632.30 and then at 1,640.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,615.00 and then at last week’s low of 1,607.40. 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 and hovering near a 12-year high. 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 and 18-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 2,973.00 and then at last week’s new for-the-move high of 2,978.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,950.00 and then at last week’s low of 2,936.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
Dow futures: Prices are weaker early today and hovering near the record high. Bulls still have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Friday’s high of 15,080 and then at last week’s high of 15,105. Sell stops likely reside just below technical support at Friday’s low of 15,000 and then at 14,980. Shorter-term moving averages are bullish early today, as the 4-day moving average is above 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: 4.5
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are slightly higher early today and hit a fresh six-week low overnight. Bulls are still in near-term technical trouble. 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 145 16/32 and then at 146 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 144 16/32 and then at the overnight low of 144 6/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 June U.S. T-Notes: Prices are slightly higher early today after hitting a fresh six-week low early on. 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 132.08.0 and then at 132.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132.00.0 and then at the overnight low of 131.23.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The U.S. dollar index is near steady in early U.S. trading. Prices Friday hit a five-week high. Bulls still have the overall near-term technical advantage and have momentum on their side. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 83.40 and then at Friday’s high of 83.52. Shorter-term support is seen at the overnight low of 83.165 and then at 83.00. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Crude oil prices are weaker early today, pressured by the stronger U.S. dollar index. Bulls still have the slight overall near-term technical advantage. In June Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at $96.77. Look for sell stops just below technical support at $95.00 and then at $94.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Markets were mostly firmer in overnight trading, on some chart consolidation. Last Friday’s monthly USDA supply and demand report was deemed mostly bearish. Weather in the U.S. Corn Belt is once again in focus for grain traders. There was some scattered frost during the weekend, but temperatures are expected to warm dramatically on Tuesday but then cool down later in the week. A good portion of the U.S. corn crop will get planted in the coming days. Soybean futures bulls have gained some upside momentum amid very strong cash basis levels in the U.S. Wheat futures trading remains very choppy. Wheat will be a follower of the corn market in the near term.
