OVERNIGHT/EARLY MORNING DEVELOPMENTS
The U.S. stock indexes are slightly lower in early electronic trading. The U.S. dollar is lower versus the major currencies in very early U.S. trading, gold is solidly higher, crude oil is sharply higher and U.S. Treasury Bonds are slightly lower in early dealings. Grains were mostly lower in overnight electronic trading. There were no major market-moving news events overnight or over the weekend. However, Iranian officials’ harsh rhetoric over the weekend, regarding its nuclear row with the U.S., did boost oil prices.
U.S. ECONOMIC REPORTS
On tap today is the ISM non-manufacturing index, Fed Chairman Bernanke speaks, along with ECB president Trichet at International Monetary Conference in Washington. Traders will especially watch what Bernanke has to say, following Friday’s weaker-than-expected U.S. jobs report.
U.S. STOCK INDEXES
The indexes were slightly lower in overnight electronic trading, following good gains last week, including a weekly high close in the S&P 500 futures. Last week’s price action has given the bulls some fresh upside technical momentum to suggest that near-term lows are in place. I still don’t look for any strong price trends to develop in the indexes. More likely is choppier and more sideways trading action during the normally quieter summer months.
September S&P 500: Prices Friday pushed to a fresh two-week high and closed at the weekly high close, which gives the bulls some fresh technical momentum. The shorter-term moving averages (9- and 18-day) are 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 Friday’s low of 1,293.20 and then at Thursday’s low of 1,280.00. Sell stops likely reside just under Friday’s low. Key upside resistance for active traders today is the 1,302.70 level–Friday’s high–and then at 1,305.00. Buy stops are likely just above Friday’s high.
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, and the 9-day moving average is turning higher, too. Prices Friday did hit a fresh two-week high. Today, key shorter-term technical support is the Friday’s low of 1,625.50. Sell stops likely reside below that level. On the upside, short-term resistance is seen at the 1,646.00 level–Friday’s high. Buy stops are likely located just above that level.
September Dow: Prices Friday hit a fresh two-week high, as bulls try to recover. The next shorter-term downside objective for the bears is pushing prices below support at Friday’s low of 11,285. 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 Friday’s high of 11,395. Shorter-term moving averages show the 4-day turning back lower, to possibly produce a bearish cross below the 9-day moving average today, to produce a minor sell signal.
U.S. TREASURY BONDS AND NOTES
Both notes and bond prices were slightly lower in overnight trading in Chicago. Friday’s U.S. jobs report was fully bullish for Treasuries and did produce nice rallies in bonds and notes Friday. Now, traders are pondering if the Fed will continue to raise U.S. interest rates, or will pause for a while. Good follow-through buying today or Tuesday would be one clue that near-term lows are in place.
September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are now turning bullish. The 4-day moving average is today poised to push above the 9-day average. Both the 4-day and 9-day are above the 18-day, which is bullish. Shorter-term resistance lies 107 23/32–the May high. Solid buy stops likely lie just above that level. A push below support at 107 even would provide the bears with some fresh shorter-term downside technical momentum. Sell stops likely reside just below that level.
September U.S. T-Notes: Prices are weaker in early morning dealings. A good number of buy stops likely reside just above shorter-term resistance at 105.30.5–the May high. Shorter-term moving averages are turning bullish. The 4-day moving average poised to move above the 9-day average, and both the 9-day and 4-day are above the 18-day moving average, which is bullish. A move in prices below shorter-term support at 105.10.0 would likely uncover sell stops.
The September U.S. dollar index is slightly lower in early morning electronic dealings and the currencies are firmer. Friday’s U.S. jobs report was bearish, suggesting the Fed may hold off on continuing to raise U.S. interest rates. The September U.S. dollar index finds key shorter-term technical support at the contract low of 83.27 and resistance at 84.00. A drop below the contract low could be the beginning of a downside “breakout” from a congestion area at lower price levels, and would signal another fresh leg down in prices for the DX. Key shorter-term technical support in the September Euro today is located at 1.3000. Light sell stops likely reside just below that support level. Shorter-term technical resistance for the Euro is seen at the contract high of 1.3074. Heavy buy stops likely reside just above that key shorter-term and intermediate- term price level.
The metals are solidly higher in early morning dealings. Still, price action last week did produce near-term chart damage in gold and silver. In August gold, prices would have to push back above resistance at $675.00 to negate a steep downtrend line in place on the daily bar chart. Key shorter-term technical support for August gold today is the $640.00 level. Sell stops likely reside just below that level, while buy stops likely reside just above shorter-term resistance at $660.00. Major sell stops likely reside below last Friday’s low of $624.00.
Prices are sharply higher in early electronic dealings, following heated Iranian rhetoric over the weekend. Prices are in a fledgling uptrend from the May low. In July crude oil, look for buy stops to reside just above resistance at $74.00. Look for sell stops just below solid support at $72.00. I don’t look for much more upside in crude, at present price levels. 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 mostly lower in overnight electronic trading, following strong gains on Friday that came from fund buying and weather concerns. Weather patterns in the Corn Belt are still providing the bulls some hope. However, some showers are in the near-term forecast for the Corn Belt. Key for bulls is the “high-pressure ridge” watch. There is a heat dome over the Plains states, and if that starts to move north, then a full blown weather market could develop in the grains. The wheat market is now showing some signs that a top is in place.