OVERNIGHT/EARLY MORNING DEVELOPMENTS
The U.S. stock indexes are slightly higher in early electronic trading, on a corrective bounce from losses Tuesday. The U.S. dollar is slightly higher versus the major currencies in very early U.S. trading, gold is solidly lower, crude oil is lower and U.S. Treasury Bonds are slightly lower in early dealings. Grains were mixed in overnight electronic trading. There were no major market-moving news events overnight.
U.S. ECONOMIC REPORTS/EVENTS
On tap today is the weekly DOE energy stocks report. Former Fed chairman Greenspan speaks, as does Fed governor Olson and Atlanta Fed president Guynn.
U.S. STOCK INDEXES
The indexes were slightly higher in overnight electronic trading. Trading has become choppy again, and trendless on a near-term basis. I still don’t look for any strong price trends to develop in the indexes. More likely is choppier and more sideways trading action during the normally quieter summer months.
September S&P 500: The bulls have last near-term technical momentum. The shorter-term moving averages (9- and 18-day) are still bullish. However, the 4-day moving average did move above the 18-day average Tuesday, but appears set to move right back below it. The shorter-term moving averages are also suggesting a choppy near-term trading environment. Today, key shorter-term technical support comes in at 1,270.00 and then at Tuesday’s low of 1,267.20. Sell stops likely reside just under both of those levels. Shorter-term upside resistance for active traders today is the 1,282.20 level–Tuesday’s high. Buy stops are likely just that price level.
September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are neutral. The 4-day is above the 9-day moving average, but the 9-day moving average is turning back down and is below the 18-day. Today, key shorter-term technical support is Tuesday’s low of 1,581.00. Heavy sell stops likely reside below that level. On the upside, short-term resistance is seen at this week’s high of 1,629.50 and then at the 1,646.00 level–last week’s high. Buy stops are likely located just above those levels.
September Dow: Prices Tuesday hit a fresh four-month low. The next shorter-term downside objective for the bears is pushing prices below near-term support at Tuesday’s low of 11,020. Heavy sell stops likely reside just below that level. Heavy sell stop placement is likely also seen just below key support at the 11,000 level. Buy stops likely reside just above technical resistance at Tuesday’s high of 11,185. Shorter-term moving averages have turned fully bearish, showing the 4-day back 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 slightly lower in overnight trading in Chicago. Both markets saw some flight-to-quality buying Tuesday, along with some more short covering in a bear market. There are still no clues of a bottoming process occurring in notes or bonds.
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 and Thursday. The 4-day moving average is now above the 9-day average. Both the 4-day and 9-day are above the 18-day. Shorter-term resistance lies at 107 27/32–Tuesday’s. Solid buy stops likely lie just above that level. A push below support at 107 even would provide the bears with some fresh shorter-term downside technical momentum. Sell stops likely reside just below that level.
September U.S. T-Notes: Prices are weaker in early morning dealings. A good number of buy stops likely reside just above stiff shorter-term and intermediate-term resistance at 105.30.5–the May high. Shorter-term moving averages are 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. A move in prices below shorter-term support at 105.14.0 would likely uncover sell stops. More stops likely reside just under support at 105.10.0.
The September U.S. dollar index is slightly higher in early morning electronic dealings and the currencies are lower. Prices are in a trading range at lower price levels. The September U.S. dollar index finds key shorter-term technical support at Monday’s low of 84.00 and then at the Tuesday’s low of 83.73. Shorter-term resistance is seen at 84.50–Tuesday’s high. A drop below the contract low could be the beginning of a downside “breakout” from a congestion area at lower price levels, and would signal another fresh leg down in prices for the DX. Key shorter-term technical support in the September Euro today is located at 1.2850. Light sell stops likely reside just below that support level. Shorter-term technical resistance for the Euro is seen at 1.2950. Light buy stops likely reside just above that shorter-term resistance level.
The metals are solidly lower in early morning dealings, as more chart damage was inflicted overnight, when prices dropped below key near-term technical support and hit a fresh six-week low. This is one clue that a near-term top is in place. In August gold, prices would have to push and close back above resistance at $650.00 to revive the bulls. Key shorter-term technical support for August gold today is the $620.00 level. Heavy sell stops likely reside just below that level. A close below major psychological support at $600 would produce major near-term chart damage. Buy stops likely reside just above shorter-term resistance at $643.00.
Prices are moderately lower in early electronic dealings. July crude oil prices are still in a fledgling uptrend from the May low. In July crude, look for buy stops to reside just above resistance at $73.00 and then at this week’s high of $73.84. Look for sell stops just below support at Tuesday’s low of $71.35. I don’t look for much more upside in crude, at present price levels. 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. It’s very likely going to take another geopolitical market “shock” to move crude above $75.00.
Prices were mixed in overnight electronic trading, with wheat steady, corn lower and beans slightly firmer. Lower “outside markets” today will limit the upside in grains, as will benign weather conditions in the Corn Belt. Traders are gearing up for Friday’s monthly USDA supply and demand report. The wheat market is still showing some signs that a top is in place–especially given sharp losses Tuesday.