Overnight Developments: The U.S. stock indexes were lower in overnight electronic trading. The U.S. dollar is stronger versus the major currencies in early trading, gold is solidly lower, crude oil is lower and U.S. Treasury Bonds are higher in early dealings. Grains were lower in overnight electronic trading. Trader focus continues on the metals markets. There were no major geopolitical developments over the weekend.
U.S. Economic Reports: There are no major U.S. economic reports due for release today. Dallas Fed President Fisher speaks at midday today.
U.S. Stock Indexes: The indexes were weaker in overnight electronic trading, following solid losses last week. Significant near-term technical damage has been inflicted on the indexes recently. 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 fully bearish and prices are well below the key 100-day moving average. Key technical support today is last week’s low of 1,258.50. Sell stops likely reside under that price level. Key upside resistance for active traders today is the 1,280.00 level.
June Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are fully bearish and prices have also dropped well below the key 100-day moving average. However, the 14-day RSI is still oversold territory (below 30.00), which is one clue that prices could see a corrective bounce today. Key technical support for today is last week’s low of 1,581.50. Sell stops likely reside below that level.
June Dow: This index has been leading the declines in the U.S. stock indexes. Look for the Dow to continue to be the leader on any significant price moves in the index. If the indexes are to post a recovery soon, the Dow will have to be the leader. Key today will be for the bulls to hold technical support at last week’s low of 11,100. Sell stop likely reside below that level. Bulls would get a technical boost today with a move above resistance at 11,300.
U.S. Treasury Bonds and Notes: Both notes and bond prices Friday closed near mid-range but did hit a fresh four-week high and closed at the weekly high close. Bulls do have some fresh technical momentum heading into the new trading week. Short covering was featured last week. 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 turning bullish. The 4-day moving average has moved above the 9- and 18-day averages, and the 9-day is now moving above the 18-day. The next near-term downside price objective for the bears is closing prices below support 106 even. It will take a close above resistance at 108 even today to provide the bulls with better upside near-term technical momentum. First resistance is seen at 107 17/32–Friday’s high–and then at 108 even. First support is seen at 107 even and then at 106 21/32–Friday’s low.
June U.S. T-Notes: Bulls posted a decent upmove last week. Buy stops do likely reside just above resistance at 106.00.0. The 4-day moving average has pushed above the 9-day average, and the 9-day is moving above the 18-day moving average, which is a positive near-term technical development. A move in prices below support at 105.00.0 likely would uncover some sell stops and would likely mean the upside correction is finished.
Currencies: The June U.S. dollar index is higher in early morning dealings and the currencies are mostly lower. While the near-term trends in the major currencies are still in place, the are losing strength as price activity has become more volatile and choppy at lower levels in the dollar index and at higher levels in the currencies. The U.S. dollar index closed at the weekly high close last week. Key support in the June Euro today is the 1.2700 level. Sell stops likely reside below that level.
Metals: The metals are solidly lower in early morning dealings. Gold is leading the way, but prices are coming off from morning lows. I would not be surprised to see the metals trade on both sides of unchanged today in volatile trading. I also look for bargain hunters to step in and give the metals a significant boost soon. The bull markets are not finished in metals, by any means. Key resistance for June gold today is the $380.00 level. Buy stops likely reside above that level, while sell stops likely reside below today’s low of $636.80 in June gold.
Energies: Prices are solidly lower in early electronic dealings. July crude oil hit a fresh six-week low of $68.17 in overnight trading. 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 lower in overnight electronic trading. The grains still feel heavy to start the week, especially in corn and wheat. My bias is still that the markets are due for some more downside action in corn and wheat, in the near term. Soybeans look less susceptible to near-term selling pressure, but will be a follower. I’m still looking to buy significant weakness in soybeans and eventually in corn. Grains will continue to closely track the “outside markets” like crude and gold. Those markets may even have more near-term influence on trading than the actual fundamentals in the grains.