Note: I am writing this blog a little early today, as I have to be out of the office to attend my wife’s uncle’s funeral.–Jim
OVERNIGHT/EARLY MORNING DEVELOPMENTS
The U.S. stock indexes are slightly higher in early electronic trading. The U.S. dollar is slightly lower versus the major currencies in very early U.S. trading, gold is modestly higher, crude oil is moderately higher and U.S. Treasury Bonds are slightly higher in early dealings. Grains were mixed in overnight electronic trading. There was no major market-moving news events overnight. The main economic event of the week occurs this morning, with the release of the U.S. employment report.
U.S. ECONOMIC REPORTS
On tap today is the U.S. jobs report for May, with non-farm payrolls expected to be up 180,000 and the unemployment rated expected to come in at 4.7%. The ECRI inflation gauge is also out today, as is the factory orders report. Chicago Fed president Moskow speaks at midday today in Chicago.
U.S. STOCK INDEXES
The indexes were slightly higher in overnight electronic trading. Traders are in a holding pattern ahead of this morning’s U.S. jobs report. Thursday’s price action has given the bulls some fresh technical momentum. But I still don’t look for any strong price trends to develop in the indexes. More likely is choppier and more sideways trading action heading into the normally quieter summer months.
September S&P 500: Prices Thursday pushed to a fresh two-week high, which gives the bulls some fresh technical momentum. The shorter-term moving averages (9- and 18-day) are now turning bullish. The 4-day moving average is above the 9-day and the 9-day is now turning higher. Today, key shorter-term technical support comes in at Tuesday’s low of 1,290.00 and then at Thursday’s low of 1,282.50. Sell stops likely reside just under this price level. Major support is seen at the May low of 1,259.50. Key upside resistance for active traders today is the 1,300.00 level. Buy stops are likely just above that key price level. A weekly high close would provide the bulls with fresh upside fuel, too.
September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are turning bullish. The 4-day has crossed above the 9-day moving average to produce a minor buy signal, and the 9-day moving average is now turning higher, too. Prices Thursday did hit a fresh two-week high. Today, key shorter-term technical support is the Thursday’s low of 1,602.00. Sell stops likely reside below that level. On the upside, short-term resistance is seen at the 1,650.00 level. Buy stops are likely located just above that level.
September Dow: A weekly high close in the Dow would boost the bulls. The next shorter-term downside objective for the bears is pushing prices below support at Thursday’s low of 11,225. Sell stops likely reside just below that level. Heavy sell stop placement is likely seen just below the May low of 11,153. Buy stops likely reside just above technical resistance at the late-May high of 11,383.
U.S. TREASURY BONDS AND NOTES
Both notes and bond prices were slightly higher in overnight trading in Chicago. Traders are awaiting the U.S. jobs report for direction. Prices could move sharply in the wake of that report. Bears are in firm overall near-term technical control of both bonds and notes.
September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are bearish. The 4-day moving average is below the 9-day average and the 18-day. Shorter-term resistance lies 106 19/32–Thursday’s high–and then at 107 even. Buy stops likely lie just above the 107 even level. A push below support at Thursday’s low of 105 27/32 would provide the bears with fresh short-term downside technical momentum. Sell stops likely reside just below that level.
September U.S. T-Notes: Prices are firmer in early morning dealings. Buy stops likely reside just above shorter-term resistance at 105.15.0–this week’s high. Shorter-term moving averages are bearish. The 4-day moving average is below the 9-day average and the 18-day moving average. A move in prices below support at Thursday’s low of 104.22.5 would likely uncover sell stops.
The September U.S. dollar index is slightly lower in early morning electronic dealings and the currencies are firmer. Trading will hinge on this morning’s U.S. jobs report. Price action has become choppier in the currencies, heading into summertime. Recent price trends (down on the DX and up in the currencies) have now weakened a bit, but are still in place. The September U.S. dollar index finds key shorter-term technical support at Thursday’s low of 84.22 and strong resistance at Thursday’s and last week’s high of 84.90. Key shorter-term technical support in the September Euro today is located at 1.2850. Heavy sell stops likely reside just below that key support level. Shorter-term technical resistance for the Euro is seen at 1.2950. Buy stops likely reside just above that key shorter-term price level.
The metals are higher in early morning dealings, on a corrective rebound from sharp losses Thursday that did produce near-term chart damage in gold and silver. In August gold, prices fell below major near-term support at the May lows, and hit a fresh five-week low of $625.70. Trading overnight saw gold hit a low of $624.00, basis August futures. Key shorter-term technical support for August gold today is the $624.00 level. Sell stops likely reside just below that level, while buy stops likely reside just above what is now shorter-term resistance at $643.00.
Prices are higher in early electronic dealings, as the choppy price action continues. The weekly DOE energy report yesterday was generally bearish, but traders seem not to pay much attention to that data for very long. Gasoline futures have been strong as we are in the peak driving season in the U.S. In July crude oil, look for buy stops to reside just above resistance at $71.35. Look for sell stops just below major support at $70.00. I still look for more trading within a range–bound by key near-term support at $68.00 in July crude and solid resistance at $75.00. A drop below the aforementioned trading range–including multiple closes below it–would then likely mean a trading range in crude oil prices between $65.00 and $70.00. It’s very likely going to take another geopolitical market “shock” to move crude above $75.00.
Prices were mixed in overnight electronic trading. Corn was lower and soybeans and wheat were higher. Weekly export sales data is out today. Grain traders will continue to watch crude oil and the metals markets, for direction. Also, weather patterns in the Corn Belt are still providing the bulls some hope, as they are leaning toward warmer and drier conditions. This will limit selling interest in the corn and soybeans. Wheat bulls need to show significant power soon, as that market is now showing signs that a top is in place.