OVERNIGHT/EARLY MORNING DEVELOPMENTS

The feature overnight was sharply lower precious metals prices, with gold down around $20.00 an ounce. All commodity markets will be closely watching the metals closely today, and will likely follow the metals, to a degree. Also, the Japanese stock market, the Nikkei, was sharply lower overnight. The U.S. stock indexes are lower in early electronic trading. The U.S. dollar is higher versus the major currencies in very early U.S. trading. Crude oil is lower and U.S. Treasury Bonds are higher in early dealings. Grains were solidly lower in overnight electronic trading. There was no major market-moving geopolitical news overnight.

U.S. ECONOMIC REPORTS/EVENTS

On tap today is the ICSC store sales index, the Producer Price Index, retail sales, the Redbook retail sales index and business inventories data. Fed chairman Bernanke speaks again today. The PPI report will be most closely watched.

U.S. STOCK INDEXES

The indexes were lower in early morning electronic trading. The bears have regained solid near-term technical power and are now looking for more on the downside in the near term.

September S&P 500: 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 1,239.80–the overnight electronic low. Light sell stops likely reside just under that level. More sell stops likely reside under shorter-term support at 1,235.00. Shorter-term upside resistance for active traders today is the overnight high of 1,249.20 and then at 1,259.00. Buy stops are likely located just above those price levels. Slow stochastics are signaling a market that is now oversold, and the RSI is close to doing so.

September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still fully bearish. The 4-day is below the 9-day moving average, and the 9-day moving average is below the 18-day. Today, key shorter-term technical support is located at the overnight low of 1,534.00. Sell stops likely reside below that level, and then below support at 1,525.00. On the upside, short-term resistance is seen at Monday’s high of 1,577.00 and then at 1,600.00. Light buy stops are likely located just above each of those levels.

September Dow: Prices Monday closed at the lowest closing level in four months. Today, heavy sell stops likely reside just below last week’s low of 10,840. The market is still oversold on a short-term technical basis and due for an upside bounce very soon. Buy stops likely reside just above shorter-term technical resistance at Monday’s high of 11,008. Shorter-term moving averages are still 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 higher in overnight trading in Chicago–benefiting from sharp losses in the metals, a firmer greenback and lower stock indexes overnight. The bulls have gained some good shorter-term technical momentum. Technical odds have increased that a near-term low is in place. My bias is that a near-term low is in place and that there is more room on the upside in the near term.

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. The 4-day moving average is above the 9-day average. Both the 4-day and 9-day are above the 18-day. However, the slow stochastics indicator is well into oversold territory, suggesting a near-term downside correction is imminent. Shorter-term resistance lies at last week’s high of 108 16/32 and then at 108 20/32. Buy stops likely lie just above those levels. A push below support at of 108 even would provide the bears with some fresh shorter-term downside technical momentum. Light sell stops likely reside just below that level.

September U.S. T-Notes: Prices are higher in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term resistance at last week’s high and the overnight high of 106.03.5. Shorter-term moving averages are still 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. However, slow stochastics show the market as short-term overbought and due for a downside correction soon. A move in prices below shorter-term support at last week’s low of 105.20.0 would likely uncover sell stops. More stops likely reside just under support at last week’s low of 105.14.0.

CURRENCIES

The September U.S. dollar index is higher in early morning electronic dealings and the currencies are lower. Dollar index bulls have near-term technical momentum, while the Euro bears have the same. The September U.S. dollar index hit a fresh six-week high overnight and finds key shorter-term technical resistance at 86.00 and then at 86.50. Shorter-term support is seen at 85.50 and then at 85.36–Monday’s low. The September Euro in overnight trading hit a fresh six-week low. The Euro finds sell stops are likely located at shorter-term technical support at the overnight low of 1.2637 and then at 1.2600. Shorter-term technical resistance for the Euro is seen at 1.2700 and then at 1.2766. Light buy stops likely reside just above those shorter-term resistance levels.

METALS

The metals are sharply lower in early morning dealings, on a continuation of the recent steep price downtrend. Gold has fallen below major psychological support at $600.00 an ounce, which is one clue that a near-term top is in place. Serious near-term chart damage has been inflicted on gold, including more in overnight trading. In August gold, prices would have to push and close back above resistance at $625.00 to give the bulls a bit of fresh technical momentum. Key shorter-term technical support for August gold today is the overnight electronic low of $590.00. Solid sell stops likely reside just below that level. Buy stops likely reside just above shorter-term and longer-term resistance at $600.00, and then above $610.00.

ENERGIES

Prices are near lower in early electronic dealings. The market dodged a bullet in the Gulf of Mexico as the tropical storm stayed away from key oil and gas installations. In July crude, look for buy stops to reside just above resistance at the overnight electronic high of $70.43 and then at $71.00. Look for sell stops just below shorter-term support at last week’s low of $60.10. Same story, which has been playing out: 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.

GRAINS

Prices were solidly lower in overnight electronic trading. Sharp losses in the metals and lower crude oil prices pressured grains overnight. Weather forecasts for the Corn Belt are not quite as bullish this morning, as they were Monday morning, but they still favor the bullish camp. I would not be surprised to see some bargain hunters step in to buy at lower price levels today, as we are in the first weather market of the summer.