* Latest Market Developments *

World stock and commodity markets were under pressure Monday following Friday’s major collapse in crude oil prices—the day after an OPEC meeting that failed to produce production cuts by member nations. January Nymex crude oil prices dropped to a five-year low of $63.72 a barrel in overnight trading. However, many markets have recovered from their lowest price levels seen in overnight trading.

The Russian ruble fell to another record low against the U.S. dollar overnight, dropping by another 5%. The U.S. dollar index is trading lower after posting gains in Asian trading.

In other overnight news, the Euro Zone’s manufacturing purchasing managers index (PMI) came in at 50.1 in November from 50.6 in October. A reading of 50.4 was expected. A reading below 50.0 suggests contraction. Focus of the market place is on Thursday’s regular monthly meeting of the European Central Bank. The ECB says its read to implement further monetary stimulus measures to boost the ailing EU economy. The central bank could make a move at Thursday’s meeting.

Meantime, China’s manufacturing PMI came in weaker than expected in November, at 50.3 versus 50.8 in October, which is an eight-month low. This report also helped to pressure Asian markets.

The Swiss “Save our Gold” referendum was handily defeated by voters Sunday. The measure would have required the Swiss National Bank to hold 20% of its assets in gold. The referendum was not expected to pass.

In other gold news, reports said major gold consumer has India lifted its import restrictions on gold, effective immediately. This news helped to lifted gold up from sharp losses suffered in Asian trading.

U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, and the global manufacturing PMI,.

(Note: Follow me on Twitter–@jimwyckoff–for breaking market news.)

Wyckoff’s Daily Risk Rating: 6.0 (While geopolitical risks have been moved to the back burner of the market place, the plunging crude oil market has somewhat rattled the market place.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

–Jim Wyckoff

U.S. STOCK INDEXES

S&P 500 March e-mini futures: Prices are weaker in early trading, on profit taking, but hovering not far below last week’s record high. 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 2,057.00 and then at last week’s high of 2,068.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,045.25 and then at 2,027.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker in early trading and seeing profit taking after hitting a 14-year high on Friday. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at last week’s high of 4,349.50 and then at 4,375.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,317.25 and then at 4,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

Dow futures: Prices are weaker in early U.S. trading but are not far below Friday’s record high. Buy stops likely reside just above technical resistance at Friday’s record high of 17,875 and then at 17,900. Sell stops likely reside just below technical support at 17,745 and then at 17,700. Shorter-term moving averages are still bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are higher early today and hit a six-week high overnight. Bulls have the firm near-term technical advantage and are gaining upside momentum. Shorter-term moving averages (4- 9- 18-day) are 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 143 1/32 and then at 143 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 142 25/32 and then at 142 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 March U.S. T-Notes: Prices are higher and hit a five-week high in early trading. Bulls have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 127.10.5 and then at 127.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 127.05.5 and then at 127.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The March U.S. dollar index is lower in early trading but hovering not far below the recent contract and four-year high. Bulls still have the solid overall near-term technical advantage. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 88.705 and then at the contract high of 88.800. Shorter-term support is seen at the overnight low of 88.280 and then at 88.000. Wyckoff’s Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

January Nymex crude oil prices are lower and hit a five-year low in early U.S. trading. Bears remain in strong overall near-term technical control. Look for buy stops to reside just above technical resistance at $68.00 and then at $69.00. Look for sell stops just below technical support at the overnight low of $63.72 and then at $63.00. Wyckoff’s Intra-Day Market Rating: 2.0

GRAINS

Grain futures markets were mixed in overnight trading. The sharply lower crude oil prices are bearish for grains but the weaker U.S. dollar index is a bullish factor on this day. The fact that grains have held up fairly well in the face of plunging crude oil prices suggests there is underlying strength in the grains. Still, it will be hard for the grains to sustain price uptrends in the face of a steep downtrend in the crude oil market.