OVERNIGHT/EARLY MORNING DEVELOPMENTS
The U.S. stock indexes are slightly lower in early electronic trading, on follow-through selling from losses Wednesday. The U.S. dollar is solidly higher versus the major currencies in very early U.S. trading, gold is again solidly lower, crude oil is solidly lower and U.S. Treasury Bonds are firmer in early dealings. Grains were mostly lower in overnight electronic trading. There was major market-moving news overnight: U.S. troops killed the al-Qaida terrorist al-Zarqawi. That news bumped oil and gold prices lower and did boost the dollar. Also, the European Central Bank today raise EU interest rates by 0.25%.
U.S. ECONOMIC REPORTS/EVENTS
On tap today is the USDA weekly export sales and the DOE natural gas storage data. Weekly U.S. jobless claims are also out today, along with wholesale trade data.
U.S. STOCK INDEXES
The indexes were slightly lower in overnight electronic trading. There is some surprise that the al-Zarqawi death did not give the markets a boost. However, worries about interest rates rising has taken center stage. 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: The bears have fresh downside technical momentum. The shorter-term moving averages (9- and 18-day) are now fully bearish. The 4-day moving average is below the 9- and 18-day average, and the 9-day is below the 18-day moving average. Today, key shorter-term technical support comes in at the May low of 1,259.50. Heavy sell stops likely reside just under that key level. Shorter-term upside resistance for active traders today is the 1,275.00 level and then at Wednesday’s high of 1,284.50. Buy stops are likely just above those price levels.
September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) back to being fully bearish. The 4-day is below the 9-day moving average, and the 9-day moving average is turning back down and is below the 18-day. Today, key shorter-term technical support is Wednesday’s low of 1,579.00. Heavy sell stops likely reside below that level. On the upside, short-term resistance is seen at Wednesday’s high of 1,612.00 and then at the 1,629.50 level–this week’s high. Buy stops are likely located just above those levels.
September Dow: Prices Wednesday hit another fresh four-month low. The next shorter-term downside objective for the bears is pushing prices below major support at 11,000. Heavy sell stops likely reside just below that level, and look to be triggered on the open today. Buy stops likely reside just above technical resistance at Wednesday’s high of 11,160. Shorter-term moving averages are fully bearish, showing the 4-day below the 9- and 18-day moving average. The 9-day is also below the 18-day.
U.S. TREASURY BONDS AND NOTES
Both notes and bond prices were firmer in overnight trading in Chicago. Both markets saw some support from the stronger U.S. dollar and on the al-Zarqawi death news. T-Bond prices did hit a fresh six-week high in overnight dealings. There are still no clues of a bottoming process occurring in notes or bonds.
September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are still fully bullish, suggesting there could be more upside moves today and Friday–especially since prices today pushed to a fresh six-week high. The 4-day moving average is now above the 9-day average. Both the 4-day and 9-day are above the 18-day. Shorter-term resistance lies at 108 even. 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 firmer in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term and intermediate-term resistance at 105.30.5–the May high. Traders may get to trigger those stops today. Shorter-term moving averages are fully bullish. The 4-day moving average is above the 9-day average, and both the 9-day and 4-day are above the 18-day moving average. A move in prices below shorter-term support at this week’s low of 105.14.0 would likely uncover sell stops. More stops likely reside just under support at 105.10.0.
The September U.S. dollar index is solidly higher in early morning electronic dealings and the currencies are lower. Importantly, price action early today has seen a bullish upside “breakout” in the dollar index, from a trading range at lower price levels. Prices today hit a fresh five-week high. The September U.S. dollar index now finds key shorter-term technical support at low of 85.00 and then at 84.50. Shorter-term resistance is seen at 85.50. The September Euro today also saw a bearish downside “breakout” from a trading range. Now, sell stops are located at shorter-term technical support at 1.2750 and then at 1.2700. Shorter-term technical resistance for the Euro is seen at 1.2800. Light buy stops likely reside just above that shorter-term resistance level.
The metals are solidly lower in early morning dealings, as more chart damage was inflicted overnight, when prices dropped below key near-term technical support and hit a fresh six-week low. This is one clue that a near-term top is in place. In August gold, prices would have to push and close back above resistance at $643.00 to revive the bulls. Key shorter-term technical support for August gold today is the $620.00 level. Heavy sell stops likely reside just below that level. A close below major psychological support at $600 would produce major near-term chart damage. Buy stops likely reside just above shorter-term resistance at today’s high of $636.00.
Prices are lower in early electronic dealings, pressured in part by the death of the al-Queda terrorist Zarqawi. Price action today negated a fledgling uptrend line drawn from the May low. In July crude, look for buy stops to reside just above resistance at $71.00 and then at $71.50. Look for sell stops just below support at Thursday’s electronic trading low of $69.54. 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.
Prices were mostly lower in overnight electronic trading, following solid gains in most grains Wednesday. Lower “outside markets” today will limit the upside in grains. Weekly USDA export sales data this morning was deemed mostly neutral for the markets. Importantly, there are now conflicting weather forecasts regarding a high-pressure ridge moving into the Corn Belt next week. That will keep trader attention even keener on the weather updates at noon today. Traders are gearing up for Friday’s monthly USDA supply and demand report. The wheat market is still showing some signs that a top is in place.