Thursday, June 13–Jim Wyckoff’s Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Japan’s Nikkei stock index is in bear territory after dropping 6% on Thursday and is now down over 20% from last month’s high. The Japanese yen also hit a two-month high against the U.S. dollar. China’s Shanghai stock index hit a six-month low as Chinese investors returned from a public holiday. Other Asian and European stock markets were also lower Thursday, which also has the U.S. stock indexes poised for a lower opening. The world market place continues to fret about the major central banks of the world taking away the easy-money punch bowl from the party. This week has seen heightened risk aversion in the worldwide market place. Worrisome to traders and investors worldwide is not only the steep stock market declines in Asia, but also the sell-off in many periphery currencies in the foreign exchange market this week, along with recently rising government bond yields worldwide. Savvy traders and investors are now seriously worried that the bear market in Japan’s equities will soon spill over into the same for the U.S. stock market. Even the usual safe-haven assets have not been immune from this week’s “when in doubt, get out” trader mentality. Gold, the U.S. dollar index and U.S. Treasuries have all seen significant selling pressure this week. There is a heavier slate of U.S. economic data due out Thursday, but the next major market event on the docket is next Wednesday’s Federal Reserve Open Market Committee (FOMC) meeting, at which time the U.S. central bank will discuss its current monetary policy and whether to make any changes to it. Fed Chairman Bernanke will also hold a press conference following that meeting. U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export price indexes, retail sales, and manufacturing and trade inventories.–Jim 

U.S. STOCK INDEXES

S&P 500 futures: Prices are weaker early today as bulls are fading. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,611.20 and then at 1,625.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the June low of 1,597.00 and then at 1,585.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are lower early today and hit a fresh five-week low overnight. Bulls are fading. The shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-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 located at the overnight high of 2,924.00 and then at 2,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,897.75 and then at 2,875.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.

Dow futures: Prices are weaker early today. Bulls are fading. Buy stops likely reside just above technical resistance at 15,000 and then at 15,100. Sell stops likely reside just below technical support at 14,900 and then at the June low of 14,840. 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 early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer today on more short covering in a bear market. Prices Tuesday hit a contract low. Bears still have the solid overall near-term technical advantage. Prices are in a six-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 bullish early today. Shorter-term resistance lies at the overnight high of 139 28/32 and then at 140 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 139 even and then at the overnight low of 138 22/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 September U.S. T-Notes: Prices are firmer early today on more short covering in a bear market. Prices Tuesday hit a contract low. Bears still have the strong near-term technical advantage. 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 bullish early today. Shorter-term resistance lies at the overnight high of 129.05.5 and then at 129.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 128.18.0 and then at 128.10.0. 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 again in early U.S. trading and hit a fresh four-month low overnight. Bears have downside near-term technical momentum. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.080 and then at Wednesday’s high of 81.510. Shorter-term support is seen at the overnight low of 80.710 and then at 80.500. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

Crude oil prices are slightly lower early today. Not much new. Bulls and bears are still on a level near-term technical playing field amid choppy trading recently. In July Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at this week’s high of $96.45. Look for sell stops just below technical support at $95.00 and then at Wednesday’s low of $94.46. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed in overnight trading, but with a bearish tone. The risk aversion in the market place Thursday could lead to some selling pressure in the grains as the day progresses. Traders will closely examine Thursday morning’s weekly USDA export sales report. Soybean bulls still have the near-term technical advantage. Corn bulls have faded following a bearish USDA report on Wednesday. Wheat bears remain in technical control as bears gained some downside momentum following Wednesday’s bearish USDA data. Weather in the U.S. Corn Belt will remain a dominant fundamental factor for the grains in the near term, although it has turned more benign this week.