OVERNIGHT/EARLY MORNING DEVELOPMENTS

The feature overnight was a good rebound in U.S. Treasuries, on some flight-to-quality buying as North Korea appears set to test a long-range missile. Crude oil prices are higher and the U.S. stock indexes are firmer in early electronic trading. The U.S. dollar is firmer versus the major currencies in very early U.S. trading. Grains were higher in overnight electronic trading. There was no fresh, major market-moving news overnight.

U.S. ECONOMIC REPORTS/EVENTS

On tap today is the ICSC store sales index, housing starts, Redbook retail sales and the ABC-Washington Post consumer confidence index.

U.S. STOCK INDEXES

The indexes are narrowly mixed in early morning electronic trading, following solid losses Monday. My bias is still that near-term lows are in place, but that trading will be choppy in the near term.

September S&P 500: The shorter-term moving averages (9- and 18-day) are mixed. The 4-day moving average is above the 9-day. But the 9-day is still below the 18-day moving average. Today, key shorter-term technical support comes in 1,247.30–Monday’s low. Sell stops likely reside just under that level. More sell stops likely reside under shorter-term support at 1,242.00. Shorter-term upside resistance for active traders today is at the overnight high of 1,253.00. Buy stops are likely located just above that price level, and then just above shorter-term resistance at 1,260.00.

September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are mixed. The 4-day is above the 9-day moving average. But the 9-day moving average is still below the 18-day. Today, shorter-term technical support is located at Monday’s low of 1,560.00. Sell stops likely reside just below that level, and then below support at 1,555.00. On the upside, short-term resistance is seen at Monday’s high of 1,586.00. Buy stops are likely located just above that level. Heavier buy stops are likely located just above last week’s high of 1,603.00.

September Dow: Bulls are fading. For today, sell stops likely reside just below support at Monday’s low of 10,985 and then just below support at 10,917. Buy stops likely reside just above shorter-term technical resistance at Monday’s high of 11,135 and then just above resistance at 11,200. Shorter-term moving averages are turning mixed, as the 4-day moving average is above the 9-day. But the 9-day is below the 18-day moving average.

U.S. TREASURY BONDS AND NOTES

Both notes and bond prices were modestly higher in overnight trading in Chicago, on some short covering from recent declines and on some flight-to-quality buying due to the North Korean missile issue. Bears have the near-term technical momentum on their side.

September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are turning bearish. The 4-day moving average is below the 9-day average and the 18-day. The 9-day is above the 18-day, but is turning back south. Shorter-term resistance lies at 107 even and then at 107 9/32. Buy stops likely lie just above those levels. Shorter-term technical support lies at Monday’s low of 106 12/32 and then at 106 6/32. Sell stops likely reside just below those levels.

September U.S. T-Notes: Prices are steady in early morning dealings. Buy stops likely reside just above shorter-term resistance at 105.00.0, and then just above resistance at Friday’s high of 105.07.0. Shorter-term moving averages are turning bearish. The 4-day moving average is below the 9-day and 18-day average. The 9-day is below the 18-day moving average. A move in prices below shorter-term support at Monday’s low of 104.21.0 would likely uncover heavier sell stops.

CURRENCIES

The September U.S. dollar index is slightly higher in early morning electronic dealings and the currencies are slightly lower. Dollar index bulls still have term technical momentum. The dollar index finds key shorter-term technical resistance at Monday’s high of 86.09. Shorter-term support is seen at the overnight low of 85.74. The September Euro today finds sell stop orders are likely located at shorter-term technical support at the overnight low of 1.2625 and then heavy sell stops just below solid support at the June low of 1.2609. Shorter-term technical resistance for the Euro is seen at the overnight high of 1.2672 and then at 1.2700. Buy stops likely reside just above those shorter-term resistance levels.

METALS

The metals are trading steady to firmer in early morning dealings. While a near-term low may be in place following late last week’s rebound, there is still the potential for a bear flag developing on the daily bar chart for August gold. In August gold, prices would have to push and close back above solid resistance at $589.00 to give the bulls a bit of fresh technical momentum. Key shorter-term technical support for August gold today is the overnight low of $564.30. Sell stops likely reside just below that level, and then just below support at $560.00. Buy stops likely reside just above shorter-term resistance at the overnight high of $576.10 and then just above shorter-term resistance at $580.00.

ENERGIES

Prices are trading higher and near the overnight high in early electronic dealings. In July crude, look for buy stops to reside just above resistance at $70.00 and then at $70.50. Look for sell stops just below shorter-term support at the overnight low of $68.85. I still look for more trading within the recent well-defined range–bound by key near-term support at $68.00 in July crude and solid resistance at $75.00. But 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.

GRAINS

Prices were higher in overnight electronic trading, on a short-covering bounce from solid losses Monday. There is presently beneficial rains in the near-term Corn Belt forecast, and that will limit buying interest in the near term. Extended weather forecasts for the Corn Belt are also deemed by traders to be non-threatening. But there’s a lot of growing season left for corn and beans. Traders will also seek direction from the “outside markets”–gold and crude oil today. It don’t look for much more downside pressure in the grains in the near term. It’s likely that the bearish near-term weather has been factored into prices.