Thursday, July 18–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The market place is awaiting round two of Fed Chairman Ben Bernanke’s testimony to the U.S. Congress Thursday morning, this time in front of a Senate panel. The Fed chief told a House committee Wednesday the U.S. central bank’s bond-buying program is “by no means on a preset course.” Bernanke reiterated the Fed remains flexible in its monetary policy. He also said if economic conditions deteriorate again the central bank could ramp up its monthly bond-buying program, also called quantitative easing. There was no clear-cut consensus in the market place on whether Bernanke’s comments were more dovish or more hawkish than his remarks of the past few weeks. Still, the majority of traders and investors view Bernanke as wanting to wind down QE later rather than sooner. Asian stock markets were mostly higher Thursday, boosted in part by Bernanke’s comments, reports said. European stock markets were narrowly mixed. The European markets have been quieter just recently. Traders and investors there may be looking ahead to August, when much of Europe is on holiday during the month. U.S. economic data due for release Thursday includes the weekly jobless claims report, leading economic indicators, and the Philadelphia Fed business survey.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady early today. Bulls 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 neutral early today. Today, shorter-term technical resistance comes in this week’s high of 1,679.40 and then at the all-time high 1,685.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,666.00 and then at 1,657.80. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly lower early today after hitting a 12-year high Wednesday. The bulls 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 neutral early today. Shorter-term technical resistance is located at this week’s high of 3,086.50 and then at 3,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 3,062.75 and then at 3,049.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady early today. Bulls have the solid near-term technical advantage. Buy stops likely reside just above technical resistance at the all-time high of 15,510 and then at 15,550. Sell stops likely reside just below technical support at 15,400 and then at Wednesday’s low of 15,380. 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: 5.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer early today on more short covering. Bears still have the overall near-term technical advantage. Prices are in a 10-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at Wednesday’s high of 135 28/32 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 7/32 and then at 135 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are firmer early today. Bears have the overall near-term technical advantage, but the bulls have gained some fresh momentum. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at Wednesday’s high of 127.10.0 and then at 127.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.31.5 and then at 126.24.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The September U.S. dollar index is slightly higher in early U.S. trading. Bulls have faded recently. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 83.060 and then at Tuesday’s high of 83.270. Shorter-term support is seen at the overnight low of 82.760 and then at this week’s low of 82.525. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

Crude oil prices are slightly lower early today. Bulls still have upside near-term technical momentum as prices hover near a 14-month high. In August Nymex crude, look for buy stops to reside just above resistance at the overnight high of $106.73 and then at this week’s high of $107.18. Look for sell stops just below technical support at $106.00 and then at $105.11. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed but mostly weaker in overnight trading. Weather forecasts for the U.S. Corn Belt remain the dominant market factor in the grains. Updated forecasts Thursday morning are calling for better chances for rainfall and cooler temps in the coming days. However, recent Corn Belt weather forecasts have seen a trend of actual rainfall amounts not meeting forecast expectations. If this trend continues, which is more likely than not, then a significant weather market rally is likely. Corn is now at its critical pollination period in much of the Corn Belt. Weekly USDA export sales data is out Thursday morning. There has been good foreign demand for U.S. grains recently, to put a floor under prices.