Monday, May 20–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Gold and silver futures early this week are leading a weak raw commodity sector to the downside. Gold prices are down for an eighth session in a row, while silver prices are at a more than 2.5-year low Monday morning. One report overnight said investors worldwide have dumped around $22 billion worth of gold exchange traded funds (ETFs) the last nearly five months. The big rally in the U.S. and Japanese stock markets, a stronger U.S. dollar, and low inflation expectations worldwide are major bearish weights on the metals and entire raw commodity sector at present. The Japanese yen’s rebound against the U.S. dollar is featured to start the new trading week. Much of the rebound is likely short covering after the yen’s major descent the past several months. Japan’s economy minister said Monday the downside price action in the yen is about completed. There is a Bank of Japan monetary policy meeting Tuesday and Wednesday that will be closely watched by the market place. However, the BOJ is not expected to make any major policy changes. Reports from China Monday said Chinese housing prices rose significantly in April, by up 3.7% and up 2.8% in two separate readings. This led to ideas Chinese monetary officials could tighten policy to stem inflationary price pressures. Such would be a bearish development for the raw commodity sector. There is more key Chinese economic data due out later this week. Dallas Fed president Richard Fisher said on CNBC Monday morning that the Federal Reserve is presently debating on when to wind down the Fed’s quantitative easing program. U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.–Jim U.S.

STOCK INDEXES

S&P 500 futures: Prices are near steady early today and hovering near Friday’s all-time high. Not much new. 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 early today. Today, shorter-term technical resistance comes in at Friday’s record high of 1,665.50 and then at 1,675.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,650.00 and then at 1,632.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly lower early today and hovering just below Friday’s 12-year high. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Friday’s high of 3,028.25 and then at 3,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,000.00 and then at 2,982.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.

Dow futures: Prices are slightly lower early today and hovering near Friday’s record high. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Friday’s record high of 15,330 and then at 15,400. Sell stops likely reside just below technical support at Friday’s low of 15,260 and then at 15,200. 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 to bearish early today. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today on short covering. Bears still have the overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. 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 neutral early today. Shorter-term resistance lies at 144 16/32 and then at 145 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 144 even and then at last week’s low of 144 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 June U.S. T-Notes: Prices are slightly higher early today on tepid short covering. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 132.00.0 and then at 132.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.22.0 and then at last week’s low of 131.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The U.S. dollar index is weaker in early U.S. trading on a profit-taking, corrective pullback from solid gains Friday that saw prices hit a 9.5-month high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 84.400 and then at last week’s high of 84.515. Shorter-term support is seen at 84.000 and then at Friday’s low of 83.865. Wyckoff’s Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

Crude oil prices are weaker early today. Bulls have the slight near-term technical advantage but trading remains choppy. In June Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at last week’s high of $96.45. Look for sell stops just below technical support at $95.00 and then at $94.50. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed but mostly firmer in overnight trading. Buying interest in the grains has been limited recently by the stronger U.S. dollar index and a generally weak raw commodity sector. Short covering is featured early Monday. Weather in the U.S. Corn Belt is still a focus for grain traders. Showers and thunderstorms during the weekend will further delay planting progress, especially for corn. However, last week could show record corn-planting progress when Monday’s USDA crop progress reports are released. Soybean bulls have recently gained upside near-term technical momentum. Wheat trading remains choppy and sideways, but with the bears holding the solid advantage.