S&P Stock Index Hits 5-Year High Early Friday

* LATEST MARKET DEVELOPMENTS *

In overnight news, China’s consumer price inflation was reported at up 2.5% in December, on an annualized basis–up
significantly from the 2.0% reading in November. That news is just a bit bearish for the commodity markets, as it suggests China’s central bank will be less accommodative in its monetary policy. However, the data also suggests China’s economy is heating up, which also means greater demand for raw commodities coming from the world’s second-largest economy. There was another well-received Italian government bond auction Friday. Shorter-term Italian bond yields dropped to a three-year low. That news supported the Euro and European stock markets. In Japan, the stock market hit a 22-month high on more Japanese government stimulus efforts that drove the beleaguered yen still lower against other major currencies. Important for many markets Thursday, the Euro currency rallied sharply and the U.S. dollar index got hammered lower following the European Central Bank meeting in which the ECB left interest rates unchanged. ECB chief Draghi in his press conference gave upbeat comments about the outlook for the European Union in the coming months. The moves by the Euro and the dollar index Thursday are likely near-term “game-changers” for the currency markets. Now, in the coming weeks it’s more likely that the Euro currency will drift sideways to higher, while the dollar index will trade sideways, or sideways to lower. Such a scenario is bullish for the raw commodity sector and European stock markets, and also arguably bullish for the U.S. stock market. U.S. economic data due for release Friday includes import and export price indexes, the international trade report, and the monthly Treasury budget statement.–Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady in early trading today, and did hit a fresh five-year high overnight. Bulls have upside near-term technical momentum. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 1,471.00 and then at 1,480.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,460.00 and then at 1,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly firmer early today and hovering near a three-month high. Bulls still have some
upside near-term technical momentum. The shorter-term moving averages (4- 9-and 18-day) are 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 early today. Shorter-term technical resistance is located at the January high of 2,747.00 and then at 2,760.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,725.00 and then at Thursday’s low of 2,713.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

Dow futures: Prices are near steady early today and hovering near a three-month high. Bulls have upside near-term technical momentum. Sell stops likely reside just below technical support at 13,370 and then at Thursday’s low of 13,325. Buy stops likely reside just above technical resistance at the January high of 13,450 and then at 13,500. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are firmer early today on short covering. Bears still have the overall 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 145 7/32 and then at this week’s high of 145 20/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 144 11/32 and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are slightly higher early today on short covering. Bears have the overall 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 131.27.0 and then at Thursday’s high of 132.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131.16.0 and then at 131.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is near steady following its shellacking Thursday. Greenback bears now have downside near-term technical momentum. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 80.00 and then at 80.22. Shorter-term support is seen at Thursday’s low of 79.74 and then at 79.50. Wyckoff’s Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

Crude oil prices are lower early today on a corrective, profit-taking pullback after prices on Thursday hit a four-month high. Bulls still have the overall near-term technical advantage. In February Nymex crude, look for buy stops to reside just above resistance at $94.00 and then at Thursday’s high of $94.70. Look for sell stops just below technical support at $92.50 and then at this week’s low of $92.42. Wyckoff’s Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed overnight. Traders are awaiting this morning’s monthly USDA supply and demand, quarterly grain stocks and annual grain summary reports, due out in late morning. Most market watchers reckon the USDA data will be generally bearish. This particular batch of USDA data will important fundamental impetus for grain price direction in coming weeks–possibly up to the late-March USDA planting intentions data. The near-term technical postures of the grain markets remain bearish at present.