Jim's Morning Markets Report--Jan. 16

January 16, 2014 12:26 AM
 

Thursday, January 16--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The feature of the market place this week is the U.S. stock
indexes that have either hit or are moving in on new record
or multi-year highs. Some mostly upbeat U.S. economic data
this week has cheered the stock market bulls. The bullish
ways of the U.S. and other world stock markets are working
against many other competing asset classes, including raw
commodities. Until the air starts to come out of the in-my-
opinion presently overly inflated stock market balloon, raw
commodities will continue to languish at best.  Also, it’s
important to remember that major bull runs in markets tend
to be stronger and last longer than most market participants
ever expect. The same is true with bear markets.

In overnight news, China’s so-called beige book quarterly
survey of banks and businesses showed loans to consumers and
businesses were hard to come by and that many loans were
made to extend current loans. "Credit transmission is
broken," concluded the survey. While the Chinese economy
continues to chug along at a healthy clip, the credit
situation in China could become very problematic in a hurry.
With the world economies and financial systems now being so
closely inter-connected, any serious credit problems in
China could quickly become a worldwide contagion.

It was also reported Thursday that the Euro zone’s consumer
inflation rate was up 0.3% in November from October and were
up 0.8% on the year. These figures are well below the 2.0%
inflation rate the European Central Bank has targeted as
being optimal. Still, German Bundesbank President Jens
Weidmann said Thursday he sees only a slight chance for
deflationary pressures to envelop the European Union.

U.S. economic data due out Thursday includes the weekly
jobless claims report, real earnings, the consumer price
index, the Philadelphia Fed business survey, the NAHB
housing market index, and Treasury international capital
flow data.

Wyckoff’s Daily Risk Rating: 6.0 (There is a decent slate of
U.S. economic data Wednesday, which could move 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 lower in early U.S.
trading, on mild profit taking from recent gains. Prices are
hovering near the record high. Bulls are in firm overall
technical command. 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 early today. Today, shorter-term
technical resistance comes in at the record high of 1,846.50
and then at 1,850.00. Buy stops likely reside just above
those levels. Downside support for active traders today is
located at Wednesday’s low of 1,831.70 and then at 1,817.50.
Sell stops are likely located just below those levels.
Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady early today as
bulls are in command. Prices Wednesday hit a 14-year high.
The shorter-term moving averages (4- 9-and 18-day) are
neutral early today. The 4-day moving average is above the
9-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
Wednesday’s high of 3,610.25 and then at 3,625.00. Buy stops
likely reside just above those levels. On the downside,
short-term support is seen at Wednesday’s low of 3,570.75
and then at 3,550.00. Sell stops are likely located just
below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady in early U.S. trading.
Bulls are in technical control. Buy stops likely reside just
above technical resistance at Wednesday’s high of 16,445 and
then at 16,500. Sell stops likely reside just below
technical support at 16,350 and then at Wednesday’s low of
16,325. Shorter-term moving averages are neutral early
today, as the 4-day moving average is below the 9-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: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady early today. The
bears still 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 early today.
Shorter-term resistance lies at Wednesday’s high of 130
25/32 and then at 131 even. Buy stops likely reside just
above those levels. Shorter-term technical support lies at
the overnight low of 130 7/32 and then at this week’s low of
130 3/32. Sell stops likely reside just below those levels.
Wyckoff's Intra-Day Market Rating: 5.0
 
March U.S. T-Notes: Prices are slightly higher early today.
Bears 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 Wednesday’s
high of 124.08.5 and then at 124.12.0. Buy stops likely
reside just above those levels. Shorter-term technical
support lies at the overnight low of 123.27.5 and then at
this week’s low of 123.24.0. Sell stops likely reside just
below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is near steady early today.
Bulls on Wednesday regained upside near-term technical
momentum. Slow stochastics for the dollar index are bullish
early today. The dollar index finds shorter-term technical
resistance at the overnight high of 81.205 and then at last
week’s high of 81.335. Shorter-term support is seen at the
overnight low of 81.045 and then at Wednesday’s low of
80.750. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

February Nymex crude oil prices are firmer early today and
hit a two-week high on more short covering. Bulls have
gained some upside near-term technical momentum this week.
Bears do still have the overall near-term technical
advantage. In February Nymex crude, look for buy stops to
reside just above resistance at the overnight high of $94.64
and then at $95.00. Look for sell stops just below technical
support at the overnight low of $93.86 and then at $93.38.
Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were slightly higher overnight. Fresh export news
arrives Thursday morning with the weekly USDA export sales
report. Soybean bulls have gained upside technical momentum
this week. Corn bulls are trying holding their ground but
need to show fresh power soon. Wheat bears remain in full
technical command. Corn and soybean traders continue to keep
an eye on South American weather, which is now heating up a
bit and may become a bullish market factor in the coming
days.
 

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