* LATEST MARKET DEVELOPMENTS *

The European Stoxx 600 index hit another five-year high overnight on growing notions the European Central Bank will soon ease its monetary policy by lowering interest rates.The ECB monthly monetary policy meeting is Thursday. The Euro currency has dropped significantly in value against the U.S. dollar just recently, on beliefs the ECB will soon cut its key interest rate. Still, the majority of analysts and economists polled believe the ECB won’t make a policy move on Thursday.

Tuesday’s EU inflation numbers, combined with similar figures released last week, are worrisome as they suggest deflationary conditions could be on the horizon for the EU. The recent EU inflation data bolsters ideas the ECB could move to ease its monetary policy in an effort to keep the tepid EU economic recovery moving forward. On Wednesday the OECD reported inflation in the major world economies in September declined for the second straight month. Annual inflation in the OECD’s 34 developed countries fell to 1.5% from 1.7% in August. These recent inflation numbers fall favorably into the camp of those market watchers wanting easy money policies of the world’s major central banks to continue.

Traders and investors are looking ahead to Friday’s key U.S. employment report for October. The non-farm payrolls number of that report is expected to have grown by around 120,000. The jobs report will be a gauge in helping the market place figure out when the Federal Reserve will start to wind down its quantitative easing of monetary policy.China’s Communist party meets this week, during which time major plans and economic reforms are unveiled by the leaders of the country. The world market place will be closely watching for any proclamations coming from that confab.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Challenger job cuts report, leading economic indicators, the global services PMI, the weekly DOE energy stocks report, and the U.S. Treasury announces its quarterly refunding package.

(Wyckoff’s Daily Risk Rating is now your way to quickly gauge investor risk appetite in the world market place each day. Each day I will assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off). Each morning I will look at several markets and scan the world’s news headlines to get a sense of how risk appetite in the market place will shape for the trading day. For example, extreme readings in my Daily Risk Rating would be a very bullish U.S. jobs report that would fully cheer investors—Wyckoff’s Daily Risk Rating would be 1. Conversely, a daily rating of 10 would be an unexpected military confrontation in the Middle East that included combat. Most days Wyckoff’s Daily Risk Rating will be around neutral–between 4 and 6.)

Wednesday’s Wyckoff’s Daily Risk Rating: 4.0 (No major developments overnight, or expected on Wednesday. However, ECB meeting Thursday and U.S. jobs data Friday will move the scale to more risk aversion, just ahead of the data’s release.)–Jim Wyckoff
 
U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer in early U.S. trading. 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 neutral early today. Today, shorter-term technical resistance comes in at the record high of 1,773.10 and then at 1,785.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,756.30 and then at last week’s low of 1,747.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher early today. 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 last week’s high of 3,401.75 and then at 3,415.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,377.75 and then at this week’s low of 3,355.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

Dow futures: Prices are higher early today. Buy stops likely reside just above technical resistance at the record high of 15,660 and then at 15,700. Sell stops likely reside just below technical support at 15,550 and then at 15,500. 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 early today. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are weaker early today. Bulls are fading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 133 5/32 even and then at 133 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132 16/32 and then at 132 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
 
December U.S. T-Notes: Prices are near steady early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 126.25.5 and then at 127.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 126.12.5 and then at 126.08.0. Sell tops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The December U.S. dollar index is lower early today. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.800 and then at this week’s high of 81.025. Shorter-term support is seen at 80.500 and then at 80.320. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

December Nymex crude oil prices are firmer early today on short covering after hitting a more-than-four-month low on Tuesday. Bears have the overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just above resistance at $95.00 and then at $95.50. Look for sell stops just below technical support at the overnight low of $93.65 and then at $93.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were slightly higher overnight. U.S. corn and soybean harvest is well over half-completed and the bearish cash grain movement and hedge selling should be fading soon. Traders are looking ahead to Friday’s latest monthly supply and demand report. That report is not expected to be bullish and is likely to show record U.S. corn and soybean production. Technically, the corn bears are in firm command, while soybeans are slightly bearish on a near-term basis and wheat bears have the near-term technical advantage.