* LATEST MARKET DEVELOPMENTS *

In overnight news, there was an upbeat economic report from China, following a string of downbeat data recently. The preliminary HSBC manufacturing purchasing managers index (PMI) for May came in at 49.7 versus 48.1 in April and was the best reading in five months. This news helped to lift world stock markets and the raw commodity sector as China is the world’s largest consumer of raw commodities and the world’s second-largest economy. Still, a PMI reading below 50.0 suggests contraction.

Meantime, the Markit composite purchasing managers’ index for the European Union fell to 53.9 in May from 54.0 in April. This report was in line with market expectations. The focus in the European Union at present is parliamentary elections taking place. Bond yields in the periphery EU countries (namely Spain and Italy) have risen recently, partly due to concerns about voters putting into office extremists who are anti-EU and may not want to pay off their own nation’s sovereign debt.

The market place has quickly digested the minutes from the latest U.S. FOMC meeting, which were released Wednesday afternoon. Those minutes showed Federal Reserve officials discussing how to go about raising interest rates and that caused a modest reaction by some markets, but it was short-lived. In the end most traders and investors reckoned there was not much new in the FOMC minutes and that U.S. interest rates are likely to remain low for quite some time to come.

The Russia-Ukraine territorial crisis is on a low simmer at present but that could change this coming weekend. The Ukraine holds a presidential election on Sunday, which could produce new tension in the region. I would not be surprised to see that within the next week or so this situation flares up again to become a front-burner issue in the market place. Such would likely be a bullish development for U.S. Treasuries, the U.S. dollar and gold.

Gold prices are firmer Thursday in part due to the Indian government relaxing rules on the importation of gold by consumers. This is likely to result in more gold purchasing from Indian consumers. India is already the world’s second-largest consumer of gold.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the U.S. flash manufacturing PMI, leading economic indicators, the Kanas City Fed manufacturing survey, and existing home sales.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still somewhat elevated, even though no new developments have occurred the past couple weeks.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.–Jim Wyckoff

U.S. STOCK INDEXES

S&P 500 June e-mini futures: Prices are near steady in early trading. Bulls are in solid overall near-term technical control. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in the overnight high of 1,890.50 and then at the record high of 1,898.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,875.00 and then at this week’s low of 1,864.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher today and hit a six-week high overnight. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 3,642.50 and then at 3,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,625.00 and then at 3,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

Dow futures: Prices are slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage. Buy stops likely reside just above technical resistance at 16,550 and then at 16,600. Sell stops likely reside just below technical support at 16,450 and then at Wednesday’s low of 16,405. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are slightly higher early today. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 137 even and then at Wednesday’s high of 137 12/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 6/32 and then at 136 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 June U.S. T-Notes: Prices are weaker early today on more profit taking. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 125.28.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 125.18.0 and then at 125.12.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The June U.S. dollar index is slightly higher in early trading. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the May high of 80.405 and then at 80.500. Shorter-term support is seen at the overnight low of 80.125 and then at 80.000. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

July Nymex crude oil prices are near steady in early U.S. trading. Prices Wednesday hit a contract high. Bulls still have good upside momentum. In July Nymex crude, look for buy stops to reside just above resistance at the contract high of $104.29 and then at $105.00. Look for sell stops just below technical support at the overnight low of $103.67 and then at $103.00. Wyckoff’s Intra-Day Market Rating: 5.0

GRAINS

Markets were higher in overnight trading, with soybeans solidly higher and wheat and corn just slightly up. July soybeans hit a new contract high overnight as the bulls are on a new run. Tight U.S. stocks of soybeans and bullish crush data recently are fueling the bean market bulls. Traders will closely examine this morning’s weekly USDA export sales report. The bull move in soybeans will at least limit selling interest in corn and wheat markets.