* LATEST MARKET DEVELOPMENTS *

World stock and financial market traders and investors are late this week seeing some anxiety develop regarding the civil war occurring in Iraq, which has escalated. Stock markets have sold off late this week, crude oil prices have soared to multi-month highs, and safe haven moves into gold and U.S. Treasuries have been featured. The U.S. said it is weighing its options and has not ruled out military action in Iraq. The market place is heading into an extra uncertain weekend. A bigger worry is that the violence in Iraq could spread to other Arab countries. There are also reports that Iran may be helping the Iraqi insurgents.

Remember just a short while ago when I discussed the U.S. Treasury bond and notes markets’ rising prices (falling yields) as being puzzling and possibly being a portent of new geopolitical trouble on the horizon—even if we did not yet know what was that trouble? Well, it appears the Iraqi situation at present could be what the U.S. Treasury market was sensing early. It would also be that the relative calm on the geopolitical front that the market place has experienced for several months may be coming to an end.

In other overnight news, there was upbeat economic data coming out of China Friday. Its industrial production rose 8.8% in May, year-on-year. Other data released Friday also showed a healthier Chinese economy, which is the second-largest in the world. One dark cloud in China recently has been a copper market scandal that has pressured copper prices. Now, there is talk the financing scandal could spread to other commodities.

In currency market news, the British pound sterling rose Friday after the Bank of England’s governor said the U.K. could see interest rates rise sooner than many expect.

U.S. economic data due for release Friday includes the producer price index and the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 7.0 (New violence and civil war in Iraq has the world market place concerned.)

(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 lower in early trading. Bulls still have the firm overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in the overnight high of 1,926.50 and then at Thursday’s high of 1,940.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,917.50 and then at the June low of 1,906.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly higher early today. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at 3,775.00 and then at this week’s high of 3,805.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 3,754.50 and then at 3,737.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

Dow futures: Prices are slightly lower in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading a bit now. Buy stops likely reside just above technical resistance at 16,700 and then at 16,750. Sell stops likely reside just below technical support at Thursday’s low of 16,640 and then at 16,600. Shorter-term moving averages are still 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are slightly lower early today. Bulls 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 early today. Shorter-term resistance lies at the overnight high of 136 6/32 and then at 136 10/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 135 15/32 and then at 135 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 September U.S. T-Notes: Prices are lower in early trading today. Bulls and bears are on an overall level near-term technical playing field. 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 the overnight high of 124.13.0 and then at this week’s high of 124.20.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.05.5 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The September U.S. dollar index is slightly higher in early trading. Bulls still have the slight overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 80.940 and then at this week’s high of 81.010. Shorter-term support is seen at the overnight low of 80.550 and then at the June low of 80.375. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

July Nymex crude oil prices are higher and hit another contract high in early U.S. trading. Iraq violence is boosting crude. Bulls have the solid overall near-term technical advantage. Prices are in a five-month-old uptrend on the daily bar chart. In July Nymex crude, look for buy stops to reside just above resistance at the contract high of $107.68 and then at $108.00. Look for sell stops just below technical support at the $106.50 and then at $106.00. Wyckoff’s Intra-Day Market Rating: 6.0

GRAINS

Markets were firmer in overnight trading, on short covering and bargain hunting. Weather in the U.S. Corn Belt is the dominant theme in the grain markets, and it remains good for growing, which is bearish for the corn and soybean prices. Technically, soybean bears now have the slight near-term advantage. Wheat and corn bears have the solid near-term technical edge. I suspect these recent downturns in the grains will be a buying opportunity for those looking to profit from a weather-market-scare bounce that is likely to occur yet this summer.