Monday, July 8–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
In overnight news, Asian shares were mostly lower following the stronger-than-expected U.S. jobs data on Friday that has bolstered notions the U.S. Federal Reserve will start to scale back is quantitative easing of monetary policy sooner rather than later. While world central banks scaling back their monetary stimulus policies is read as bearish for stock markets by many, it can also be a bullish factor for equities as it shows the world economies are improving at a faster pace. European stock markets were firmer Monday on some positive developments coming out of Portugal and Greece. Portugal’s governing party did a weekend cabinet reshuffle to shore up strife in that country. While Greece’s major creditors issued a report Monday that said economic and financial conditions in Greece are still uncertain, reports also said Greece has reached a deal with its creditors on another cash infusion. However, at a government short-term debt auction in Germany Monday, the yields on the bills turned negative again. This is a clue of keener risk aversion among the European Union investors and traders. There has been an escalation in violence in Egypt the past few days that has the attention of the market place. There are concerns the violence will escalate in Egypt in the coming days, and even worries that civil unrest could spread to other unsettled countries in the Middle East and beyond. Gold is seeing some safe-haven demand on the latest crisis in Egypt. The market place is awaiting the Wednesday release of China’s latest trade report and the minutes of the last U.S. Federal Reserve FOMC meeting. U.S. economic data due for release Monday is light and includes the consumer installment credit report.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are higher early today and hit a fresh nearly three-week high overnight. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the June high 1,648.70 and then at 1,672.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,626.60 and then at 1,620.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
Nasdaq index futures: Prices are higher early today and hit a fresh nearly three-week high overnight. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is located at the overnight high of 2,978.25 and then at 3,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 2,960.50 and then at 2,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
Dow futures: Prices are higher early today and hit a fresh nearly three-week high overnight. Buy stops likely reside just above technical resistance at 15,200 and then at 15,250. Sell stops likely reside just below technical support at 15,100 and then at 15,075. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish early today. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are firmer early today on more short covering after hitting a new contract low overnight. Bears still have the solid overall near-term technical advantage. Prices are in a nine-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 133 even and then at 133 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight contract low of 132 2/32 even and then at 131 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0 September U.S. T-Notes: Prices are firmer early today on short covering after hitting a new contract low overnight. Bears have the solid near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 124.29.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight contract low of 124.11.5 and then at 124.00.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The September U.S. dollar index is slightly lower in early U.S. trading, on profit taking from recent gains that saw prices hit a three-year high on Friday. Bulls still 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 the overnight high of 84.835 and then at Friday’s high of 84.930. Shorter-term support is seen at the overnight low of 84.545 and then at 84.25. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Crude oil prices are weaker higher early today and did hit a fresh 14-month high overnight. Bulls still have upside near-term technical momentum. In August Nymex crude, look for buy stops to reside just above resistance at the overnight high of $104.12 and then at $105.00. Look for sell stops just below technical support at $102.00 and then at $101.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Markets were mostly firmer in overnight trading on short covering. Near-term supplies of corn and soybeans are still tight, as reflected in cash basis levels. Weather in the U.S. Corn Belt remains benign at present, which favors the bears. However some hotter weather is in the extended forecast for the Corn Belt, which could become bullish. It’s very likely going to take a weather market scare in the Corn Belt in the next few weeks to jump-start a significant rally in the grain markets. Grain market bears still presently have the near-term technical advantage. The monthly USDA supply and demand report is out Thursday.
