Tuesday, March 26–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The market place is still digesting the agreement reached Monday among European Union finance ministers, the International Monetary Fund and the Cyprus government on a bailout for Cyprus’ banking system that kept the island nation in the European monetary system. Later in the day Monday it was reported that a European Union finance official said the Cyprus bailout measure could serve as a template for future EU banking problems. That news initially injected fresh uncertainty into the market place and deflated European and U.S. stocks markets, while boosting the U.S. dollar index. The EU finance official has since back-tracked on his “template” statement. Banks in Cyprus remain closed and are scheduled to reopen Thursday. This latest flare-up in the European Union sovereign debt crisis is a reminder of the enormity and severity of that situation, overall. The EU debt crisis will remain an underlying bullish factor for safe-haven assets like gold, the U.S. dollar and U.S. Treasuries for a long time to come. Reason: Traders and investors worldwide, including in the EU, are asking themselves, “Would I chance keeping my life-long savings in a troubled currency (the Euro) and in a shaky Euro zone financial system?” U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the advance report on durable goods, the S&P/Case-Shiller home price index, new residential sales, the consumer confidence index, and the Richmond Fed business survey.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer early yesterday and hovering not far below Monday’s five-year high. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early yesterday. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early yesterday. Yesterday, shorter-term technical resistance comes in at Monday’s high of 1,560.30 and then at 1,575.00. Buy stops likely reside just above those levels. Downside support for active traders yesterday is located at Monday’s low of 1,539.20 and then at last week’s low of 1,529.60. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early yesterday and not far below the recent six-month high. Bulls have the overall near-term technical advantage. The shorter-term moving averages (4- 9-and 18-day) are neutral early yesterday. 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 bullish early yesterday. Shorter-term technical resistance is located at the March high of 2,817.50 and then at 2,825.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,784.50 and then at Monday’s low of 2,771.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer early yesterday and hovering near Monday’s all-time record high. Bulls have the solid near-term technical advantage. Sell stops likely reside just below technical support at Monday’s low of 14,325 and then at 14,300. Buy stops likely reside just above technical resistance at Monday’s high of 14,488 and then at 14,500. Shorter-term moving averages are neutral early yesterday, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early yesterday. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower early yesterday on the better investor risk appetite to start the trading week.Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. 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 neutral early yesterday. Shorter-term resistance lies at the overnight high of 143 14/32 and then at last week’s high of 143 31/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 143 even and then at Monday’s low of 142 20/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 June U.S. T-Notes: Prices were weaker overnight. Bulls and bears are on a level near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are bullish early yesterday. 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 neutral early yesterday. Shorter-term resistance lies at the overnight high of 131.19.0 and then at Monday’s high of 131.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.08.0 and then at last week’s low of 131.02.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The U.S. dollar index is near steady early yesterday. Bulls were impressive in recovering the index from its spike low seen early Monday. The greenback bulls have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early yesterday. The dollar index finds shorter-term technical resistance at Monday’s high of 83.110 and then at 83.250. Shorter-term support is seen at 82.750 and then at 82.500. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

Crude oil prices are firmer early yesterday and hovering near Monday’s five-week high. Bulls have the near-term technical advantage. In May Nymex crude, look for buy stops to reside just above resistance at Monday’s high of $95.65 and then at $96.00. Look for sell stops just below technical support at the overnight low of $94.67 and then at $94.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were narrowly mixed overnight. Corn and wheat market bulls still some upside near-term technical momentum, with soybean bulls trying to regain momentum after posting good gains late last week. There were freezing temperatures the past two days in the U.S. Plains states, which may have damaged the HRW crop there. Grain traders are looking ahead to Thursday’s USDA planting intentions and quarterly grain stocks reports. The plantings intentions report is one of the most important USDA grain reports of the year. Trading in grain futures markets is likely to be subdued ahead of Thursday’s batch of important USDA data.