Wednesday, September 18–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

After weeks or even months of anticipation and speculation in the market place, today is the day many traders and investors have been eagerly awaiting. Wednesday afternoon the market place gets the results of this week’s FOMC meeting, including a press conference by Fed Chairman Ben Bernanke. Most hope the Fed will lay out the specific timing of a scaling back of its $85 billion-a-month bond-buying program, which is also called quantitative easing. A majority of the market place believes the U.S. central bank will announce it will begin to scale back, or “taper” its monthly bond purchases by around $10 billion or $15 billion. The surprise to the markets could be if the Fed either does nothing at this meeting, or is more aggressive in its initial reduction in bond purchases. Importantly, the FOMC on Wednesday will also update its forecasts for U.S. economic conditions in the coming months, which will also be closely examined by the market place. Look for active trading in markets Wednesday afternoon after the FOMC information is out, including potential high volatility in some markets. In other overnight news, European Union construction activity rose for the fourth month in a row in July, at up 0.3% from June, but still down 1.2% from July of 2012. Germany led the rise, while Spain’s decline in construction activity weighed down the collective rise in activity. Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, and the weekly DOE liquid energy stocks report.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are slightly higher early today and hovering not far below the record high scored in August. 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 to bullish early today. Today, shorter-term technical resistance comes in at the all-time high of 1,705.00 and then at 1,715.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,687.90 and then at 1,675.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are firmer early today and are not far below a 12-year high hit on Monday. 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. 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 3,200.00 and then at this week’s high of 3,213.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,175.00 and then at this week’s low of 3,156.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.

Dow futures: Prices are near steady Wednesday. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at 15,500 and then at 15,550. Sell stops likely reside just below technical support at this week’s low of 15,410 and then at 15,350. 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: 5.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are near steady early today. 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 to bullish early today. Shorter-term resistance lies at the overnight high of 132 6/32 and then at 132 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 131 14/32 and then at this week’s low of 131 11/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 September U.S. T-Notes: Prices are near steady early today. 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 124.09.5 and then at this week’s high of 124.25.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.00.0 and then at 123.22.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The September U.S. dollar index is near steady early today. Bulls are weakening, technically. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 81.505 and then at 81.750. Shorter-term support is seen at this week’s low of 81.135 and then at 81.000. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

October Nymex crude oil prices are firmer early today on a corrective bounce from selling pressure seen Monday and Tuesday. Crude oil bulls still have the overall near-term technical advantage but have faded this week. In October Nymex crude, look for buy stops to reside just above resistance at the overnight high of $106.57 and then at $107.00. Look for sell stops just below technical support at this week’s low of $104.94 and then at the September low of $104.21. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were narrowly mixed overnight. Rainfall in the U.S. Corn Belt the past several days is somewhat helping late-maturing soybeans, and that’s been bearish for futures prices this week. Focus is on early yield reports on the harvesting of the U.S. corn and soybean crops in the Corn Belt—and on any fresh export demand for U.S. grains. Technically, the soybean bulls still have the overall advantage, while corn and wheat market bears are in firm technical command.