Tuesday, March 19–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
In overnight news, markets were still jittery ahead of Tuesday’s scheduled vote by the Cyprus parliament on the controversial EU/IMF bailout package unveiled over the weekend that included taxing savings accounts in domestic banks. European stocks were slightly lower and the Euro currency was also slightly lower overnight. Asian stock markets were firmer. There were no reported bank “runs” in other EU countries Tuesday, which helped to calm trader and investor worries on the matter. Cyprus banks remain closed this week as the bailout measure is scheduled to be voted upon Tuesday. The German ZEW economic expectations index rose in March to its highest level in three years. However, the report also warned of the uncertainty regarding the EU/IMF bailout of Cyprus and the recent Italian election uncertainty could harm the German economic recovery in the coming weeks and months. Also Tuesday, Euro zone construction output fell sharply in January, to its lowest level since 1997. That report hints the Euro zone economy continues in overall recession. Attention of the market place is also turning to the Federal Open Market Committee monetary policy meeting of the U.S. Federal Reserve, which starts Tuesday and ends Wednesday. Fed Chairman Ben Bernanke will hold a press conference following the meeting’s conclusion Wednesday afternoon. Better U.S. economic data released recently has the commodity market bulls worried the Fed could start to tap the brakes on its very accommodative monetary policies of the past few years. U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, and the FOMC begins its two-day monetary policy-setting meeting.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are weaker early yesterday. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early yesterday. 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 neutral to bearish early yesterday. Yesterday, shorter-term technical resistance comes in at Monday’s high of 1,552.10 and then at last week’s high of 1,558.60. Buy stops likely reside just above those levels. Downside support for active traders yesterday is located at 1,535.00 and then at this week’s low of 1,529.60. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index futures: Prices are slightly lower early yesterday. The shorter-term moving averages (4- 9-and 18-day) are neutral early yesterday. 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 neutral to bearish early yesterday. Shorter-term technical resistance is located at Monday’s high of 2,797.00 and then at last week’s high of 2,815.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,770.00 and then at Monday’s low of 2,749.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
Dow futures: Prices are near steady early yesterday. Sell stops likely reside just below technical support at Monday’s low of 14,360 and then at 14,300. Buy stops likely reside just above technical resistance at Monday’s high of 14,445 and then at last week’s high of 14,465. Shorter-term moving averages are bullish early yesterday, 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 to bearish early yesterday. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are higher early yesterday on more short covering and some safe-haven buying. Bears still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early yesterday. 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 yesterday. Shorter-term resistance lies at 143 16/32 and then at Monday’s 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 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0 June U.S. T-Notes: Prices were higher overnight on more short covering and safe-haven demand. Shorter-term moving averages (4- 9- 18-day) are neutral early yesterday. 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 yesterday. Shorter-term resistance lies at the overnight high of 131.15.0 and then at this week’s high of 131.21.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.08.0 and then at the overnight low of 131.02.5. 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 near steady early yesterday. The greenback bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early yesterday. 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 Monday’s low of 82.625 and then at 82.255. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Crude oil prices are slightly higher early yesterday and poked to a fresh three-week high overnight. In April Nymex crude, look for buy stops to reside just above resistance at $94.50 and then at $95.00. Look for sell stops just below technical support at $93.50 and then at $93.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Markets were firmer overnight on some short covering. The grain markets have been trading in divergent fashion recently. That suggests to me that more choppy and non-trending price action is probable in the near term. Grain traders will continue to monitor the key “outside markets” for direction. The very weak technical posture in wheat suggests there may not be much room for upside movement in corn and soybeans–until wheat shows some price strength.
