Overnight Developments: The U.S. stock indexes were higher in overnight electronic trading. The U.S. dollar is firmer versus the major currencies in early trading, gold is modestly higher, crude oil is solidly higher and U.S. Treasury Bonds are lower in early dealings. Grains were higher in overnight electronic trading. There were no major geopolitical news events that occurred overnight.
U.S. Economic Reports: On tap today are ICSC store sales index, Redbook sales index, the Richmond Federal Reserve survey–none of which are expected to be major market movers today.
U.S. Stock Indexes: The indexes were higher in overnight electronic trading, on a corrective bounce from recent solid losses. Serious near-term technical damage has been inflicted on the stock indexes recently. But I don’t look for strong price trends to develop in the indexes. More likely is choppier and more sideways trading action heading into the summer months.
June S&P 500: The shorter-term moving averages (4- 9- and 18-day) are still fully bearish and prices are well below the key 100-day moving average. Key technical support today is Monday’s fresh six-month low of 1,255.30. Sell stops likely reside under key technical support level. Key upside resistance for active traders today is still the 1,280.00 level. I look for more short-covering support to lift the market today.
June Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still fully bearish and prices are also well below the key 100-day moving average. However, the 14-day RSI is still oversold territory (below 30.00), but is now moving back higher, which is one clue that prices could see a corrective bounce today. Key technical support for today is Monday’s low of 1,576.00. Sell stops likely reside below that level. On the upside, key short-term resistance is seen at the 1,612.00 level. I look for more short-covering support to lift the market today.
June Dow: This index hit a fresh two-month low Monday and has been leading the declines in the U.S. stock indexes. I look for the Dow to continue to be the leader on any significant price moves in the index. The Dow is due for an upside corrective bounce and I look for short covering to support today. Key today will be for the bulls to hold technical support at Monday’s low of 11,064. Sell stops likely reside below that level. Bulls would get a technical boost today with a move above short-term resistance at 11,200.
U.S. Treasury Bonds and Notes: Both notes and bond prices were weaker in overnight trading and early this morning. Prices Monday hit a fresh four-week high, but the bulls are becoming exhausted after the recent short-covering bounce. Bears are still in overall technical control of both markets, however.
June U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are still turning bullish. The 4-day moving average is above the 9- and 18-day averages, and the 9-day is now moving above the 18-day. The next short-term downside price objective for the bears is closing prices below support 106 15/32. Sell stops likely lie below that level. It will take a close above resistance at Monday’s high of 107 26/32 to provide the bulls with fresh upside short-term technical momentum. Buy stops likely reside above that level. First resistance is seen at 107 12/32 and then at 106 26/32. First support is seen at 106 24/32 and then at 106 21/32.
June U.S. T-Notes: Bulls have posted a decent upmove, but are now tired. Buy stops do likely reside just above resistance at Monday’s high of 106.00.5. The 4-day moving average has pushed above the 9-day average, and the 9-day is trying to move above the 18-day moving average, but is faltering. A move in prices below support at 105.08.0 likely would uncover some sell stops and would likely mean the upside correction is finished.
Currencies: The June U.S. dollar index is firmer in early morning dealings and the currencies are mostly lower. The recent near-term trends in the major currencies are still in place–down for the DX and up for the other currencies. Monday’s price action helped confirm the recent trends are likely to continue. But price action has become choppier. The June U.S. dollar index finds key short-term technical support at 84.00 and resistance at 85.00. Key support in the June Euro today is the 1.2800 level. Resistance for the Euro is seen at Monday’s high of 1.2910. Buy stops likely reside above that level.
Metals: The metals are higher in early morning dealings, with copper futures solidly higher. My bias is that the metals have put in near-term lows with recent price action, and now trade will be choppier, but with an upside bias. Today I look for bargain hunters to step in and give the metals a significant boost. The bull markets are not finished in metals, by any means. Key resistance for June gold today is the $680.00 level. Buy stops likely reside above that level, while sell stops likely reside below support at $650.00 in June gold.
Energies: Prices are solidly higher in early electronic dealings. July crude oil hit a fresh six-week low of $68.17 on Monday, but has rebounded strongly from that level. Look for buy stops to reside just above resistance at $71.00. Look for sell stops just below support at $70.00. I don’t look for solid downside price pressure from here. I 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.
Grains: Prices were solidly higher in overnight electronic trading. Weekly crop progress reports showed worse-than-expected wheat crop ratings, and that will give a boost to wheat today–and the other grains are likely to follow. I’m still looking to buy significant weakness in soybeans and eventually in corn, but will be patient. Grains will continue to closely track the “outside markets” like crude and gold, which are higher early today. Those markets may even have more near-term influence on trading than the actual fundamentals in the grains.