Wednesday, August 21–Jim Wyckoff’s Morning Web Log
* LATEST MARKET DEVELOPMENTS *
The market place is quieter early Wednesday, as traders and investors await the Federal Reserve’s FOMC minutes that are released in the afternoon. Market watchers will be looking at the minutes for some clarity on the near future path of U.S. monetary policy. Markets could become volatile in the immediate aftermath of the FOMC minutes’ release. There is also a world central bankers meeting in Wyoming that begins Wednesday. However, Fed Chairman Ben Bernanke will not attend it and no major proclamations are expected to come out of that event. The recent turmoil in Asian currency and financial markets has somewhat stabilized, at least for the moment, Wednesday. The Indian Rupee and the Indonesian Rupiah currencies have been hardest hit. Indian and Indonesian central bank officials are taking action to stabilize their currencies, but likely with only very limited success. There are still worries about an “Asian contagion” situation that has in the past spooked markets worldwide. Rising interest rates in the major world economies have put pressure on the periphery currencies. The higher rates in the major economies have started to reverse the flows of investor monies that had been moving into the periphery country markets the past few years. Just Wednesday, a German government bond auction fetched the highest yields in a year and a half. U.S. government bond and note yields are also on the rise this week. An Asian currency contagion would likely prompt keen safe-haven demand for gold. After the FOMC minutes are digested by the market place Wednesday afternoon attention will quickly turn to Chinese manufacturing data that is due out Thursday. China is the world’s second-largest economy, but the leading worldwide importer of many key raw commodities. Traders and investors are still watching the Egypt unrest, which continues to see violence between citizens and government militia. This situation has appeared to not worsen this week, which has allowed traders to focus on other matters. Any escalation in violence is likely to impact the market place, and could also prompt a rise in demand for safe-haven assets, including gold. As of this writing Wednesday morning, breaking news reports said Syria has used chemical weapons against its civilians, with hundreds killed. This matter will be closely monitored by the market place, and is yet another geopolitical hotspot that could flare up to become a major markets factor.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, the weekly DOE liquid energy stocks report and the FOMC minutes.–Jim
U.S. STOCK INDEXES
S&P 500 futures: Prices are weaker early today. The bulls have faded. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 1,656.50 and then at 1,670.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,641.20 and then at 1,625.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
Nasdaq index futures: Prices are lower early today. The bulls still have the overall near-term technical advantage but have faded. The shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at the overnight high of 3,084.00 and then at this week’s high of 3,100.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 3,060.25 and then at 3,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
Dow futures: Prices are lower early today after hitting a six-week low Tuesday. Bulls have faded. Buy stops likely reside just above technical resistance at 15,000 and then at Tuesday’s high of 15,045. Sell stops likely reside just below technical support at 14,900 and then at 14,850. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are slightly lower early today. Bears have the solid overall near-term technical advantage. There are no early technical clues of a market bottom being close at hand. 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 13/32 and then at 132 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131 even and then at Tuesday’s low of 130 13/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5 September U.S. T-Notes: Prices are slightly lower early today. Bears have the solid 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 Tuesday’s high of 125.09.0 and then at 125.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.00.0 and then at Wednesday’s low of 124.21.0 Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The September U.S. dollar index is higher in early U.S. trading, on short covering in a bear market. The bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.170 and then at this week’s high of 81.415. Shorter-term support is seen at the overnight low of 80.925 and then at this week’s low of 80.770. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
October Nymex crude oil prices are lower again early today on more profit taking from recent gains. Bulls still have the overall near-term technical advantage but are fading a bit. In October Nymex crude, look for buy stops to reside just above resistance at the overnight high of $105.35 and then at $106.00. Look for sell stops just below technical support at the overnight low of $104.43 and then at $104.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Markets were higher in overnight trading, led by soybeans. A weather market is playing out in the grains—especially for soybeans and to a lesser degree corn. The western U.S. Corn Belt has portions that remain very dry. The recent good gains in corn suggest that market has put in a bottom. For soybeans, the strong gains suggest prices can continue to trend sideways to higher in the near term. Wheat will follow the corn market. The Pro Farmer Midwest Crop Tour is in progress. So far, the early results show good crop yield potential, which has been a bit bearish.
