* Latest Market Developments *
NOTE: I am out of the office all week this week. My friend and fellow market analyst Ken Seehusen will be producing my report today. Ken’s format and style is a bit different than mine, but I think you’ll enjoy and benefit from his work, too.
—Jim Wyckoff
The STOCK INDEXES
The December NASDAQ 100 was lower overnight and posted its lowest level since August 22nd. Beneath the U.S. stock market’s record-setting gains, trouble is stirring. About 47% of stocks in the NASDAQ Composite Index are down at least 20 percent from their peak in the last 12 months. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 4059.86 are needed to confirm that a short-term top has been posted and would open the door for additional weakness near-term. If December resumes this year’s rally, monthly resistance crossing at 4258.97 is the next upside target. First resistance is the reaction high crossing at 4106.00. Second resistance is monthly resistance crossing at 4258.97. First support is the 20-day moving average crossing at 4059.86. Second support is broken resistance marked by July’s high crossing at 3983.25.
The December S&P 500 was lower overnight as it extends the decline off this month’s high. The S&P 500 index, which has closed at new highs 33 times in 2014 and where less than 6% of companies are in bear markets shows the appetite for risk is narrowing as the Federal Reserve pulls back from its economic stimulus after a five-year rally that added almost 16$ trillion to equity values. It’s been three years since investors saw a 10 percent decline in the S&P Index and they’re starting to avoid companies that will suffer the most when the market stumbles. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. If December extends this month’s decline, the reaction low crossing at 1930.20 is the next downside target. Closes above the 10-day moving average crossing at 1987.19 are needed to confirm that a short-term top has been posted. First resistance is the 10-day moving average crossing at 1987.19. Second resistance is the reaction high crossing at 2000.00. First support is the overnight low crossing at 1969.00. Second support is the reaction low crossing at 1930.20.
December T-bonds were higher due to short covering overnight as they consolidated some of the decline off August’s high. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If December extends the decline off August’s high, the 50% retracement level of the March-August-rally crossing at 135-21 is the next downside target. Closes above the 20-day moving average crossing at 138-12 are needed to confirm that a low has been posted. First resistance is the 20-day moving average crossing at 138-12. Second resistance is August’s high crossing at 141-16. First support is last Friday’s low crossing at 135-25. Second support is the 50% retracement level of the March-August-rally crossing at 135-21.
ENERGY
October Nymex crude oil was lower overnight and is testing support marked by the 38% retracement level of the 2009-2011-rally crossing at 90.62. The decline was due to China’s industrial output, which expanded at the weakest pace since the global financial crisis. Stochastics and the RSI are neutral to bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 93.45 are needed to confirm that a short-term low has been posted. If October extends the decline off June’s high, the 50% retracement level of the 2009-2011-rally crossing at 85.64 is the next downside target. First resistance is the reaction high crossing at 96.00. Second resistance is the reaction high crossing at 97.75. First support is the 38% retracement level of the 2009-2011-rally crossing at 90.62. Second support is the 50% retracement level of the 2009-2011-rally crossing at 85.64.
CURRENCIES
The December Dollar was higher overnight and poised to resume this year’s rally. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If December extends this year’s rally, weekly resistance crossing at 84.96 is the next upside target. Closes below the 20-day moving average crossing at 83.25 would confirm that a short-term top has been posted. First resistance is last Tuesday’s high crossing at 84.65. Second resistance is weekly resistance crossing at 84.96. First support is the 10-day moving average crossing at 84.05. Second support is the 20-day moving average crossing at 83.25.
GRAINS
December corn was lower despite a wide scale frost event across a large portion of the upper Midwest on Friday night. The market will be accessing any frost damage that occurred this past weekend. However, overnight market action suggest that traders do not seem too concerned about the overall damage to this year’s corn crop. Stochastics and the RSI are oversold and remain neutral to bearish signaling that sideways to lower prices are possible near-term. If December extends the decline off May’s high, monthly support crossing at 3.24 1/2 is the next downside target. Closes above the 20-day moving average crossing at 3.57 3/4 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 3.47 1/4. Second resistance is the 20-day moving average crossing at 3.57 3/4. First support is last Thursday’s low crossing at 3.35 3/4. Second support is monthly support crossing at 3.24 1/2.
December wheat was lower overnight as it extends this year’s decline. The low-range close sets the stage for a steady to lower opening when the day session begins trading. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If December extends the aforementioned decline, monthly support crossing at 4.91 1/4 is the next downside target. Closes above the 20-day moving average crossing at 5.41 3/4 are needed to confirm that a low has been posted. First resistance is the 20-day moving average crossing at 5.41 3/4. Second resistance is the reaction high crossing at 5.79 1/4. First support is the overnight low crossing at 4.96. Second support is monthly support crossing at 4.91 1/4.
November soybeans was lower overnight as it extends this summer’s decline. The high-range close sets the stage for a steady to lower opening when the day session begins trading. Stochastics and the RSI are oversold and are turning neutral to bullish hinting that a short-term low might be in or is near. Closes above the 20-day moving average crossing at 10.19 1/4 are needed to confirm that a low has been posted. If November extends this summer’s decline, monthly support crossing at 9.30 1/2 is the next downside target. First resistance is the 20-day moving average crossing at 10.19 1/4. Second resistance is the reaction high crossing at 10.38. First support is last Thursday’s low crossing at 9.69 1/2. Second support is monthly support crossing at 9.30 1/2.
