Friday, May 10–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
In overnight news, the surge in the U.S. dollar against the other major world currencies, which started in late trading Thursday and continued into Friday, has caught the attention of the world market place. The U.S. dollar index, which is a basket of six major world currencies weighted against the greenback, hit a fresh two-week high overnight. There were unfounded rumors swirling late Thursday that a major financial newspaper would soon report the Federal Reserve is set to end its quantitative easing program. That helped to goose the greenback and put strong downside price pressure on gold and even some pressure on U.S. stock indexes late Thursday. The dollar has surged strongly against the Japanese yen the past two days, pushing well below the Yen 100 level. The better U.S. weekly jobless claims data Thursday morning was one factor supporting the stronger U.S. currency. The better jobless claims data combined with last week’s stronger U.S. employment data does push the needle a little closer to the camp that wants to end the Fed’s big monthly bond-buying program, also called quantitative easing. However, it’s still a stretch to conclude there has been any change in sentiment among Federal Reserve FOMC members away from the consensus of easy money policies. The slump in the yen helped drive the Japanese stock market to a five-year high overnight. Bank of Japan Governor Kuroda said Friday that markets are determining foreign exchange rates. That’s a clue the BOJ is not at all alarmed by the yen’s big decline the past several months. There is a Group of Seven finance ministers and central bankers meeting held in London on Friday. Reports overnight said there was a positive inflow of investor funds into gold-backed exchange traded funds (ETFs), at 2.5 tons Thursday. The report said that is the first positive inflow in five weeks. U.S. economic data due for release Friday is light and includes the treasury budget statement. Fed Chairman Ben Bernanke speaks Friday morning at a bank conference in Chicago.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices slightly higher early today and hovering near the all-time high. Bulls have the solid overall near-term technical advantage. 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 Thursday’s record high of 1,632.30 and then at 1,640.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 1,620.00 and then at this week’s low of 1,607.40. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are slightly higher early today and hovering near a 12-year high. Bulls have the solid overall near-term technical advantage. 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 overnight high of 2,971.25 and then at Thursday’s new for-the-move high of 2,978.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 2,950.00 and then at this week’s low of 2,936.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
Dow futures: Prices are firmer early today and hovering near the record high. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Thursday’s record high of 15,105 and then at 15,150. Sell stops likely reside just below technical support at 15,000 and then at 14,980. 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 bearish early today. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. TREASURY BONDS AND NOTES
June U.S. T-Bonds: Prices are lower early today and hit a fresh five-week low overnight. Bulls are in near-term technical trouble. Shorter-term moving averages (4- 9- 18-day) are neutral 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 146 even and then at the overnight high of 146 22/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 145 14/32 and then at 145 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0 June U.S. T-Notes: Prices are lower early today and hit a fresh five-week low overnight. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 132.24.5 and then at 133.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132.08.5 and then at 132.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The U.S. dollar index is higher in early U.S. trading and hit a fresh two-week high overnight. Bulls have the overall near-term technical advantage and have gained fresh power late this week. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 83.215 and then at 83.325. Shorter-term support is seen at 83.000 and then at the overnight low of 82.765. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
Crude oil prices are lower early today, pressured by the stronger U.S. dollar index. Bulls still have some upside momentum. A bullish pennant pattern has formed on the daily bar chart. In June Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at Thursday’s high of $96.77. Look for sell stops just below technical support at $95.00 and then at this week’s low of $94.85. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Markets were mixed in overnight trading, on short covering and position evening ahead of Friday morning’s monthly USDA supply and demand report. That report is expected to be bearish for corn and soybeans. The U.S. Corn Belt saw some scattered showers the past 24 hours, but is expected to see drier and warmer weather late this week and next week. That’s bearish for corn, as a big chunk of the U.S. corn crop will get planted in the coming days if the weather forecasts are correct. Soybean futures bulls have gained some upside momentum late this week, while wheat futures trading remains choppy.
