* LATEST MARKET DEVELOPMENTS *
The minutes of the latest meeting of the Federal Reserve’s Open Market Committee, held in early December, were released Thursday afternoon and they somewhat surprisingly revealed several FOMC members believe that quantitative easing of U.S. monetary policy–specifically its hefty monthly bond-buying program–should be wound down during 2013. Fed Chairman Bernanke has said in recent months that interest rates will not rise before 2015. Thus, many market watchers had just assumed the U.S. central bank would also keep what has been called by many “QE Infinity” in place well beyond this year. However, the recent better U.S. economic data readings have been an early clue the Fed should be considering taking its foot off the gas regarding aggressive monetary policy easing, which does carry with it problematic inflationary implications. Nevertheless, Thursday’s news has spooked the commodity market bulls and in turn has given the U.S. dollar index a major boost higher. The past four years of very easy U.S. monetary policy have been an underlying bullish factor for the raw commodity sector. In other news, the most important U.S. economic report of the month is due on Friday morning–the Labor Department’s employment situation report. The key non-farm payrolls figure is expected to have risen by 150,000 in December, with the unemployment rate is forecast at 7.7%, which is unchanged from last month. A strong U.S. jobs report Friday would further bolster the case for those Fed officials who reckon the central bank should back off on further quantitative easing measures. In European news overnight, Euro zone inflation held steady in December, at a 2.2% annualized rate–the same as in November. Other U.S. economic data due for release Friday includes manufacturers’ shipments and inventories, the ISM non-manufacturing report on business, the global services PMI, and the weekly DOE energy stocks report.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are near steady in early trading today, on some chart consolidation after hitting a 2.5-month high on Thursday. Bulls still have some upside near-term technical momentum. 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 Thursday’s high of 1,460.50 and then at the September high of 1,467.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,445.80 and then at 1,439.30. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are firmer early today. Bulls still have some upside near-term technical momentum. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Thursday’s high of 2,747.00 and then at 2,760.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 2,719.00 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
Dow futures: Prices are near steady early today on some chart consolidation from recent strong gains. Bulls still have some upside near-term technical momentum. Sell stops likely reside just below technical support at Thursday’s low of 13,290 and then at 13,250. Buy stops likely reside just above technical resistance at Thursday’s high of 13,355 and then at 13,400. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are solidly lower early today and hit a fresh 3.5-month low overnight. Bears have strong near-term downside technical momentum. 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 bearish early today. Shorter-term resistance lies at 144 even and then at the overnight high of 144 17/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 143 16/32 and then at the
September low of 143 8/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
March U.S. T-Notes: Prices are solidly lower early today and hit a fresh 2.5-month low overnight. Bears have solid downside momentum. 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 bearish early today. Shorter-term resistance lies at 131.08.0 and then at the overnight high of 131.17.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.05.0 and then at 131.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
U.S. DOLLAR INDEX
The March U.S. dollar index is sharply higher in early U.S. trading and hit a fresh four-week high overnight. Bulls are gaining good upside near-term technical momentum this week. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the December high of 81.05 and then at 81.25. Shorter-term support is seen at the overnight low of 80.67 and then at 80.50. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
Crude oil prices are lower early today on profit taking after hitting a 2.5-month high on Wednesday. The stronger U.S. dollar is also a negative for crude. In February Nymex crude, look for buy stops to reside just above resistance at $92.50 and then at $93.00. Look for sell stops just below technical support at $91.00 and then at $90.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were mixed overnight. The key “outside markets” are bearish for grains early Friday–sharply higher U.S. dollar
index and lower crude oil prices. The near-term technical postures of the grain markets are fully bearish at present. Would-be bulls need to look for the very early technical clues that the near-term price downtrends in the grains have ended. Nothing of that nature has occurred yet. Traders will scrutinize this morning’s weekly USDA export sales report.
