* Latest Market Developments *

Geopolitics is front and center in the market place Friday morning. Thursday night President Obama authorized air strikes against militants in Iraq, who have thousands of civilians trapped without food or water on a mountain in northern Iraq. Also late Thursday the cease-fire between Israel and Hamas was broken. Hamas is again firing rockets into Israel, and Israel has resumed air strikes on the Gaza strip. The Russia-Ukraine crisis has heated up this week as Russian troops are massed at the Ukraine border.  Reports also said Russian rebels shot down a Ukrainian military jet Thursday. Heading into a very uncertain weekend on the geopolitical front, traders and investors have adopted a keener risk-off attitude Friday morning. That’s boosting safe-haven assets like gold and U.S. Treasuries, while putting downside price pressure on world stock markets.

In overnight news, there was important economic data coming out of China. The world’s second-largest economy saw its exports surge in July to score a record monthly trade surplus. China exports in July were up 14.5%, year-on-year, which was double what the market place expected and well above the rise of 7.2% in exports seen in June. China’s imports fell 1.6% in July following a 5.5% rise in June.

U.S. economic data due for release Friday includes preliminary productivity and costs, and monthly wholesale trade inventories.

Wyckoff’s Daily Risk Rating: 8.0 (The market place is today focused on the still-simmering geopolitical matters: the Russia-Ukraine crisis, Iraq and the Gaza strip.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I 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), and 5 being neutral.

–Jim Wyckoff

U.S. STOCK INDEXES

S&P 500 September e-mini futures: Prices are slightly higher in early trading and hit a 2.5-month low overnight. Bulls have faded recently to suggest a major market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,906.75 and then at Thursday’s high of 1,925.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,890.25 and then at 1,880.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly higher in early trading today and hit a six-week low overnight. Bulls are fading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 3,870.00 and then at Thursday’s high of 3,893.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,827.50 and then at 3,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

Dow futures: Prices are slightly higher in early U.S. trading and are hovering near a 3.5-month low. Bulls have faded to suggest a major market top is in place. Buy stops likely reside just above technical resistance at 16,350 and then at 16,400. Sell stops likely reside just below technical support at 16,300 and then at Thursday’s low of 16,285. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher early today and hit another contract high overnight. Safe-haven buying is featured this week. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at 140 even and then at the overnight contract high of 140 11/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 139 10/32 and then at 139 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0 September U.S. T-Notes: Prices are higher and hit a contract high overnight, on safe-haven demand. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight contract high of 126.17.5 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 126.00.0 and then at the overnight low of 125.29.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0

U.S. DOLLAR INDEX

The September U.S. dollar index is weaker in early trading, on profit taking from recent gains. Prices are hovering not far below this week’s nine-month high. Bulls have seen safe-haven demand support their case. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.670 and then at this week’s high of 81.775. Shorter-term support is seen at the overnight low of 81.350 and then at 81.250 Wyckoff’s Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

September Nymex crude oil prices are firmer in early U.S. trading, on short covering after hitting a three-month low on Thursday. Bears still have the overall near-term technical advantage as prices are in a six-week-old downtrend on the daily bar chart. In September Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at the overnight high of $98.45. Look for sell stops just below technical support at the overnight low of $97.35 and then at $97.00. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

Markets were slightly lower in overnight trading. Bears remain in full command of corn and soybeans. This year will likely see record corn and soybean yields in the U.S. It’s likely that this year the corn and soybean markets will put in “harvest lows” before the harvest of the U.S. crops has even begun. The wheat futures market bulls have made progress recently. Wheat futures prices hit multi-week highs Wednesday and there are now clues the wheat markets have bottomed out.