Wednesday, July 3–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
Nymex crude oil futures prices pushed above $102.00 a barrel and the highest level in over a year in overnight trading, as the civil unrest in Egypt has the world market place anxious. Egypt’s president has defiantly refused the army’s call for him to step down. While Egypt is not a major oil exporter, the tensions in that nation could be a proxy for developments to come in other unsettled regions of the Middle East, and beyond. It should not be a surprise that there are fresh worries regarding the European Union and its financial problems. There is a political crisis in Portugal and there are concerns Greece can’t meet its debt obligations. Two of Portugal’s key government ministers have resigned in protest of the country’s austerity programs. Most European bond yields rose Wednesday, except for Germany’s, which fell, as European investors sought out the safe-haven German debt. The Euro currency saw selling pressure Wednesday due in part to these new worries. Some better Euro zone retail sales and purchasing managers’ data Wednesday only slightly assuaged the European markets. Asian and European stock markets were mostly lower overnight on the new geopolitical development. There was also some more weak economic data coming out of China Wednesday, as the country’s service sector PMI fell to 53.9 in June from 54.3 in May. Gold is seeing some mild safe-haven demand surface due to the Egypt turmoil and the new concerns coming out of the European Union. The U.S. Independence holiday is Thursday and many U.S. markets close early Wednesday. The important U.S. jobs report is out Friday morning. The key non-farm payrolls number of that report is forecast to come in at up around 160,000 in June, with the unemployment rate seen down to 7.5% in June from 7.6% in May. The European Central Bank and Bank of England monthly meetings are Thursday. U.S. economic data due for release Wednesday includes the weekly jobless claims report, the weekly MBA mortgage applications survey, the Challenger job cuts report, international trade report, the ISM non-manufacturing report, the global services PMI, the weekly DOE energy stocks report, and the ADP national employment report.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are weaker early today. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,608.20 and then at this week’s high of 1,620.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,593.50 and then at 1,580.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index futures: Prices are weaker early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is located at the overnight high of 2,924.75 and then at Tuesday’s high of 2,941.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,897.00 and then at 2,884.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
Dow futures: Prices are lower early today. Buy stops likely reside just above technical resistance at 14,861 and then at 14,900. Sell stops likely reside just below technical support at 14,750 and then at 14,700. 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: 4.5
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are higher early today on more short covering. Bears still have the overall near-term technical advantage, but the bulls are having the better week this week. Prices are still in a two-month-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. 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 136 27/32 and then at 137 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 136 even and then at the overnight low of 135 26/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are higher early today on short covering. Bears still have the near-term technical advantage, but bulls have gained just a bit of upside momentum this week. Shorter-term moving averages (4- 9- 18-day) are neutral bearish 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 127.02.5 and then at 127.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.17.0 and then at 126.08.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The September U.S. dollar index is lower in early U.S. trading, on profit taking from recent gains that saw prices hit a five-week high overnight. Bulls still have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 83.935 and then at 84.000. Shorter-term support is seen at 83.500 and then at this week’s low of 83.170. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
Crude oil prices are solidly higher early today and hit a fresh 13-month high. Bulls have upside near-term technical momentum. In August Nymex crude, look for buy stops to reside just above resistance at the overnight high of $102.18 and then at $102.50. Look for sell stops just below technical support at $100.00 and then at the overnight low of $99.59. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
Markets were higher in overnight trading on more short covering. Near-term supplies of corn and soybeans are still tight, as reflected in cash basis levels. Weather in the U.S. Corn Belt remains benign at present. It’s very likely going to take a weather market scare in the Corn Belt in the coming weeks to jump-start a significant rally in the grain markets. History shows that trading action on Friday and early next week is could be pivotal for the grain markets. This timeframe can see grain price trends reverse, or accelerate. Stay tuned!
