Jim's Morning Markets Report--August 22

August 22, 2013 01:50 AM
 

Thursday, August 22--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The market place has had some time to digest Wednesday
afternoon’s FOMC minutes that revealed no clear consensus
from FOMC members on when to start to wind down the Fed’s
monthly bond-buying program, also known as quantitative
easing. While the minutes were not all that different from
the last minutes of the FOMC that were released several
weeks ago, the "take-away" the market place garnered from
this latest Fed event was that "tapering" of quantitative
easing is coming, and likely sooner rather than later. The
FOMC minutes reinforced ideas that the long, long road of
very easy money from the world’s major central banks will
reach an end in the coming months. Such is being deemed
bullish for the U.S. dollar, and bearish for world bond
markets and periphery currencies. U.S. 10-year note yields
hit a two-year high of 2.925% overnight. German and U.K.
bond yields also hit multi-year highs overnight. Meantime,
Asian currency and financial markets remain strained. The
Indian rupee and Turkish lira hit new record lows versus the
U.S. dollar Thursday. Indian and Indonesian central bank
officials have taken steps to stabilize their currencies,
but with only very limited success. There are worries about
an "Asian contagion" that has in the past roiled markets
worldwide. Rising interest rates in the major world
economies have put pressure on the periphery currencies.
Chinese manufacturing data Thursday showed improvement from
the prior month. The HSBC purchasing managers index rose to
50.1 in August from 47.7 in July. A reading over 50.0
suggests economic growth. China is the world’s second-
largest economy, but the leading worldwide importer of many
key raw commodities. The China data somewhat assuaged the
Asian markets, but the concerns of an Asian contagion
outweighed the positive China data. Traders and investors
have moved the ongoing Egypt unrest to the back burner for
the moment, as there are no major, new developments there.
However, 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. News reports that Syria
has used chemical weapons against its civilians, with
hundreds killed, is a matter that 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 Thursday includes the weekly
jobless claims report, the U.S. flash manufacturing PMI, the
house price index, leading economic indicators, and the
Kansas City Fed manufacturing survey.--Jim
   
U.S. STOCK INDEXES

S&P 500 futures: Prices are firmer early today after hitting
a fresh seven-week low overnight. 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
bullish 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 the overnight low of 1,631.70 and then at 1,625.00. Sell
stops are likely located just below those levels. Wyckoff's
Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early today after
hitting a fresh four-week low overnight. The bulls 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 to bullish
early today. Shorter-term technical resistance is located at
this week’s high of 3,100.50 and then at 3,114.00. Buy stops
likely reside just above those levels. On the downside,
short-term support is seen at the overnight low of 3,055.50
and then at 3,035.00. Sell stops are likely located just
below those levels. Wyckoff's Intra-Day Market Rating: 6.9.

Dow futures: Prices are higher early today after hitting a
six-week low Wednesday. Bulls have faded. Buy stops likely
reside just above technical resistance at 14,900 and then at
14,950. Sell stops likely reside just below technical
support at Wednesday’s low of 14,845 and then at 14,800.
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
to bearish early today. Wyckoff's Intra-Day Market Rating:
5.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are lower early today and hit
another contract low overnight. 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 to bearish early today. Shorter-
term resistance lies at the overnight high of 130 13/32 and
then at 131 even. Buy stops likely reside just above those
levels. Shorter-term technical support lies at the contract
low of 129 28/32 and then at 129 16/32. Sell stops likely
reside just below those levels. Wyckoff's Intra-Day Market
Rating: 4.0
 
September U.S. T-Notes: Prices are lower early today and
hit a fresh contract low overnight. 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 to bearish early today. Shorter-term resistance
lies at the overnight high of 124.16.5 and then at
124.24.0. Buy stops likely reside just above those levels.
Shorter-term technical support lies at the contract low of
124.02.5 and then at 124.00.0 Sell stops likely reside just
below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The September U.S. dollar index is solidly higher in early
U.S. trading, on more short covering. The bears still have
the overall near-term technical advantage, but the bulls
have gained some upside momentum. Slow stochastics for the
dollar index are bullish early today. The dollar index finds
shorter-term technical resistance at the overnight high of
81.760 and then at 82.000. Shorter-term support is seen at
the overnight low of 81.410 and then at 81.000. Wyckoff's
Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

October Nymex crude oil prices are firmer early today on a
corrective bounce from recent selling pressure. Bulls still
have the overall near-term technical advantage but have
faded. In October Nymex crude, look for buy stops to reside
just above resistance at the overnight high of $104.72 and
then at $105.00. Look for sell stops just below technical
support at this week’s low of $103.50 and then at $103.00.
Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were lower in overnight trading. The stronger U.S.
dollar index is putting downside price pressure on the
entire raw commodity sector Thursday. Trading in the grains
has turned choppy this week. Corn and soybean bulls still
have some technical momentum on their side. A weather
market is playing out in the grains—especially for
soybeans. The western U.S. Corn Belt has portions that
remain very dry. 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. Grain traders will
scrutinize Thursday morning’s USDA weekly export sales
data.
 

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