Monday, March 18–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
There has been a new twist to the European Union sovereign debt crisis. Cyprus is in the spotlight to start the new trading week. It appears Cypriot officials are considering taxing savings accounts in their domestic banks as a part of an overall banking bailout plan with the European Central Bank and the International Monetary Fund. That, in turn, prompted fears other financially troubled nations in the EU could do the same at some point. The Cyprus parliament was set to vote on the new measures Monday, but that vote was reportedly rescheduled for Tuesday. This has not only infuriated Cypriots with savings accounts, but also raised fears of a “run” on those banks in the other economically troubled EU countries. There were statements from EU officials that said the Cyprus bailout package was a “one-off” matter and that the savings tax would not be implemented in other EU countries. But that did little to assuage fears among EU citizens with savings deposits at banks. The Cyprus savings account tax measure was apparently not discussed with Russia, which has a major loan out to the island nation in which Cyprus is trying to extend. The Russians are not at all happy about being left out of the new bailout plan, with Russian president Putin call it unfair and dangerous. European and Asian stock markets, the Euro currency and U.S. stock indexes were hit hard to the downside on the Cyprus developments over the weekend. Italian and Spanish bond yields rose Monday, which is a further sign of increasing stress in the European Union. Safe-haven assets benefited from the new uncertainty coming out of the European Union, as the U.S. dollar index, U.S. Treasuries and gold saw price rallies Monday. U.S. economic data due for release Monday is light and includes the NAHB housing market index.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are solidly lower early today and hit a fresh two-week low on the Cyprus and EU worries. 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 and 18-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 at the overnight high of 1,545.30 and then at last week’s high of 1,558.60. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,529.60 and then at 1,520.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
Nasdaq index futures: Prices are lower and hit a fresh two-week low overnight. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-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 located at the overnight high of 2,778.75 and then at 2,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,749.00 and then at 2,735.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
Dow futures: Prices are lower early today. Sell stops likely reside just below technical support at 14,300 and then at 14,250. Buy stops likely reside just above technical resistance at 14,375 and then at 14,400. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are solidly higher and hit a two-week high early today on short covering and safe-haven buying. Bears still 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 bullish early today. Shorter-term resistance lies at 143 16/32 and then at the overnight high of 143 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 142 24/32 and then at the overnight low of 142 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 June U.S. T-Notes: Prices are solidly higher and hit a fresh two-week high overnight on short covering and safe-haven demand. 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 bullish early today. Shorter-term resistance lies at the overnight high of 131.21.5 and then at the March high of 132.00.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.08.0 and then at 131.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The U.S. dollar index is solidly higher early today on safe-haven buying interest. The greenback bulls have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at last week’s high of 83.180 and then at 83.250. Shorter-term support is seen at the overnight low of 82.725 and then at 82.255. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Crude oil prices are lower early today amid the “risk-off” day in the market place and also pressured by the stronger U.S. dollar. In April Nymex crude, look for buy stops to reside just above resistance at the overnight high of $93.26 and then at last week’s high of $93.84. Look for sell stops just below technical support at $92.00 and then at $91.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were lower overnight as the key “outside markets” were bearish to start the new trading week–stronger U.S. dollar index and weaker crude oil prices. The grain markets have not been in near-term technical “synch” recently. That suggests to me that more choppy and non-trending price action is probable in the near term.
