Jim's Morning Markets Report--Dec. 10

December 10, 2013 12:26 AM
 

Tuesday, December 10--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

In overnight news, European Central Bank president Mario
Draghi said the EU is not headed for a deflationary debacle
like that of Japan—even though EU inflation is very low and
is expected to remain that way for quite some time. His
comments suggest the ECB will keep its very easy money
policies for a long time to come.

Traders and investors are looking forward to next week’s
meeting (Dec. 17-18) of the U.S. Federal Reserve’s Open
Market Committee (FOMC). Recent upbeat U.S. economic data,
including a stronger-than-expected U.S. jobs report last
Friday, suggest the Fed might move up its timeline for
implementing a tapering of its monthly bond-buying program,
also called quantitative easing, including some who think
the Fed will announce a tapering at next week’s FOMC
meeting. The steady drumbeat of speculation on the precise
timing of Fed tapering has done two things to the market
place: One, it has numbed traders and investors to the
actual event, which is likely to lessen its significance
when it does actually occur. And two, the markets have
already mostly factored into their price structures the Fed
tapering, when it does occur. The actual surprise to the
market place now would be a string of weak U.S. economic
data that puts off Fed tapering for several months—but that
is unlikely.

U.S. economic data due for release Tuesday includes the
Manpower quarterly employment survey, the weekly Goldman
Sachs and Johnson Redbook retail sales reports, and the ISM
semiannual report on business.

Wyckoff’s Daily Risk Rating: 5.0 (There is not much in the
way of important worldwide economic data due out until next
week’s FOMC meeting. Thus, trading activity is likely to be
more subdued until the middle of next week.)

(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
   
U.S. STOCK INDEXES

S&P 500 futures: Prices are near slightly higher in early
U.S. trading and hovering very close to the recent record
high. The shorter-term moving averages (4-, 9- and 18-day)
are bullish early today. The 4-day moving average is above
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 at the record high of 1,812.30 and then
at 1,825.00. Buy stops likely reside just above those
levels. Downside support for active traders today is located
at 1,800.00 and then at 1,790.00. Sell stops are likely
located just below those levels. Wyckoff's Intra-day Market
Rating: 6.0

Nasdaq index futures: Prices are higher early today and hit
another 13-year high overnight. The shorter-term moving
averages (4- 9-and 18-day) are bullish early today. The 4-
day moving average is above the 9-day. The 9-day average is
above the 18-day. Short-term oscillators (RSI, slow
stochastics) are bullish early today. Shorter-term technical
resistance is located at the overnight high of 3,524.25 and
then at 3,535.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at
Monday’s low of 3,505.00 and then at 3,477.00. Sell stops
are likely located just below those levels. Wyckoff's Intra-
Day Market Rating: 6.0.

Dow futures: Prices are slightly higher early today. Buy
stops likely reside just above technical resistance at
Monday’s high of 16,050 and then at 16,100. Sell stops
likely reside just below technical support at 16,000 and
then at 15,950. 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 to bearish early today. Wyckoff's
Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are higher early today, on more
short covering after hitting a contract low last Friday. The
bears still have the overall near-term technical advantage
as prices are in a seven-week-old downtrend on the daily bar
chart. 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 bullish early today.
Shorter-term resistance lies at the overnight high of 129
17/32 and then at 130 even. Buy stops likely reside just
above those levels. Shorter-term technical support lies at
the overnight low of 129 15/32 and then at Monday’s low of
129 2/32. Sell stops likely reside just below those levels.
Wyckoff's Intra-Day Market Rating: 6.0
 
March U.S. T-Notes: Prices are higher early today, on more
short covering after hitting an 11-week low last Friday.
Shorter-term moving averages (4- 9- 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.
Oscillators (RSI, slow stochastics) are bullish early
today. Shorter-term resistance lies at the overnight high
of 124.22.5 and then at 125.00.0. Buy stops likely reside
just above those levels. Shorter-term technical support
lies at the overnight low of 124.12.5 and then at Monday’s
low of 124.06.5. Sell stops likely reside just below those
levels. Wyckoff's Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly lower early today
and hit another six-week low overnight. The greenback bears
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 80.310 and then at Monday’s high of
80.490. Shorter-term support is seen at the overnight low of
80.175 and then at 80.000. Wyckoff's Intra Day Market
Rating: 4.5

NYMEX CRUDE OIL

January Nymex crude oil prices are solidly higher early
today. Prices hit a six-week high overnight. Bulls have the
firm near-term technical advantage. In January Nymex crude,
look for buy stops to reside just above resistance at the
overnight high of $98.74 and then at $99.00. Look for sell
stops just below technical support at $98.00 and then at
$97.50. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed overnight. Traders are awaiting the
latest monthly USDA supply and demand report Tuesday
morning. Corn and wheat futures bears are still in full
technical control. Soybean bulls still have the near-term
technical advantage and are gaining more upside momentum.
However, I cannot see this divergence between corn and wheat
(bearish), and soybean prices (bullish) continuing. Either
corn and wheat will have to pull out of their bearish ways,
or soybean prices will back off or at least stabilize. One
or the over is likely to occur very soon.
 

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