Jim's Morning Markets Report--Dec. 18

December 18, 2013 12:40 AM
 

Wednesday, December 18--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Today is the day. The highly anticipated U.S. Federal
Reserve Open Market Committee (FOMC) meeting ends in early
afternoon with a statement and then a press conference from
outgoing Fed chairman Ben Bernanke. Recent upbeat U.S.
economic data and last week’s U.S. government budget deal
suggest the Fed will move up its timeline for implementing a
tapering of its monthly bond-buying program, also called
quantitative easing—possibly as early as today. However,
there is no clear consensus on precisely when the Fed will
make its move. Some traders and analysts reckon the actual
announcement of the Fed tapering will cause high volatility
in markets. While market prices are likely to gyrate in the
immediate aftermath of the announcement, I don’t look for
markets to experience extreme or unsettling high volatility.
Reason: Traders and investors have had many weeks to digest
and factor into market prices the near certainty that the
Fed will taper at some point soon. One positive regarding a
tapering announcement on Wednesday would be that the market
place can move on to other matters after beating this dead
horse for quite some time.

European stock markets were firmer overnight, boosted in
part by another upbeat economic report coming out of
Germany. The Ifo business confidence index rose to 109.5 in
December from 109.3 in November, which is the highest
reading since April of 2012. However, somewhat mitigating
the stronger German number was news that construction output
in the European Union fell 1.2% in October, from September—
the second straight monthly drop and the sharpest decline
since January.

Other U.S. economic data due for release Wednesday includes
the weekly MBA mortgage applications survey, new residential
construction, and the weekly DOE energy stocks report.

Wyckoff’s Daily Risk Rating: 8.0 (Wednesday afternoon’s FOMC
statement could cause at least a brief burst of high price
volatility in many markets.)

(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 slightly higher in early U.S.
trading. 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 1,786.20 and then at 1,800.00. Buy stops likely
reside just above those levels. Downside support for active
traders today is located at Tuesday’s low of 1,770.50 and
then at this week’s low of 1,755.00. Sell stops are likely
located just below those levels. Wyckoff's Intra-day Market
Rating: 5.5

Nasdaq index futures: Prices are slightly higher early
today. The shorter-term moving averages (4- 9-and 18-day)
are neutral early today. The 4-day moving average is below
the 9-day and 18-day. The 9-day average is above the 18-day.
Short-term oscillators (RSI, slow stochastics) are neutral
early today. Shorter-term technical resistance is located at
Tuesday’s high of 3,479.00 and then at this week’s high of
3,491.25. Buy stops likely reside just above those levels.
On the downside, short-term support is seen at Tuesday’s low
of 3,456.25 and then at 3,450.00. Sell stops are likely
located just below those levels. Wyckoff's Intra-Day Market
Rating: 5.5.

Dow futures: Prices are slightly higher early today. Buy
stops likely reside just above technical resistance at this
week’s high of 15,875 and then at 15,900. Sell stops likely
reside just below technical support at 15,800 and then at
Tuesday’s low of 15,780. Shorter-term moving averages are
bearish early today, as the 4-day moving average is below
the 9-day. The 9-day moving average is below 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

March U.S. T-Bonds: Prices are slightly lower early today.
The bears have the overall near-term technical advantage as
prices are in a two-month-old downtrend on the daily bar
chart. Shorter-term moving averages (4- 9- 18-day) are
neutral early today. The 4-day moving average is above the
9-day. The 9-day is below the 18-day moving average.
Oscillators (RSI, slow stochastics) are neutral to bullish
early today. Shorter-term resistance lies at this week’s
high of 130 5/32 and then at 130 11/32. Buy stops likely
reside just above those levels. Shorter-term technical
support lies at 129 16/32 and then at last week’s low of 129
2/32. Sell stops likely reside just below those levels.
Wyckoff's Intra-Day Market Rating: 5.0
 
March U.S. T-Notes: Prices are near steady early today.
Shorter-term moving averages (4- 9- 18-day) are still
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 neutral to
bullish early today. Shorter-term resistance lies at the
overnight high of 124.19.5 and then at 124.30.0. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at 124.10.0 and then at last week’s
low of 124.03.5. Sell stops likely reside just below those
levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly higher early today,
on tepid short covering. The greenback bears still have the
overall near-term technical advantage. Prices are in a six-
week-old downtrend on the daily bar chart. Slow stochastics
for the dollar index are neutral early today. The dollar
index finds shorter-term technical resistance at 80.370 and
then at Tuesday’s high of 80.445. Shorter-term support is
seen at Tuesday’s low of 80.135 and then at 80.000.
Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

January Nymex crude oil prices are near steady early today.
Bulls still have the slight overall near-term technical
advantage. In January Nymex crude, look for buy stops to
reside just above resistance at $98.00 and then at $98.50.
Look for sell stops just below technical support at $97.00
and then at $96.50. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. Grain markets are
seeing the holiday doldrums set in. Corn got a bit of a
boost Tuesday on some fresh export demand for U.S. corn.
The South American soybean and corn crops are a mixed bag
for corn and soybean futures. Reports Tuesday said hot temps
at 90 degrees, or above, were hurting the corn crop, but
that beneficial moisture is helping the bean crop.
Technically, corn and wheat futures bears are in full
control. Soybean bulls have the near-term technical
advantage.
 

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