Jim's Morning Markets Report--June 20

June 20, 2013 01:42 AM
 

Thursday, June 20--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The market place Thursday morning sees traders and investors
in a keen "risk-off" mentality following Wednesday’s U.S.
Federal Reserve events.  Asian and European stock markets
slumped overnight, while gold and silver prices dropped to
2.5-year lows. U.S. stock indexes are also solidly lower
Thursday morning. Importantly, world bond markets are also
seeing serious selling pressure Thursday. The U.S. dollar
index has rallied sharply after earlier this week hitting a
four-month low. While the FOMC statement released Wednesday
afternoon said U.S. monetary policy will not see an imminent
change and there was no mention about tapering of the Fed’s
monthly bond-buying program, Fed Chairman Ben Bernanke at
his press conference after the statement was released hinted
the Fed in the coming months will back off the accelerator
on its monthly bond buying. After further digesting the Fed
news the market place now reckons the Fed will indeed start
scaling back its monthly bond purchases (tapering) by the
end of this year. Some Fed watchers are now saying that by
this time next year the Fed’s monthly bond buying could be
completely gone. More raw commodity-market-bearish news came
from China Thursday, as the HSBC flash PMI dropped to 48.3
in June from 49.2 in May. Any reading below 50.0 suggests
contraction. Reports said the China manufacturing data
Thursday was the weakest in months. The raw commodity sector
is getting hit hard Thursday morning, led by gold hitting a
fresh 2.5-year low, on the prospect of the Fed’s tapering.
For the past few years the commodity markets have been
supported by the devaluation of the U.S. dollar. Now that
the Fed appears ready to "take the punch bowl away from the
party," many markets are spooked. More bad news for gold
came from overnight reports that said Indian imports of gold
will decline by 30% due to recent Indian government taxing
measures meant to reduce the country’s trade imbalance.
There is civil unrest in Turkey and Brazil this week that
traders and investors are still monitoring. If the
situations there see an escalation and violence in the
streets, the gold market could see some safe-haven demand
surface. U.S. economic data due for release Thursday
includes the weekly jobless claims report, the U.S. flash
manufacturing PMI, existing home sales, leading economic
indicators and the Philadelphia Fed business outlook
survey.--Jim
   
U.S. STOCK INDEXES

S&P 500 futures: Prices are lower early today. Bulls still
have the overall near-term technical advantage, but are
fading again. 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 is below the 18-day moving
average. Short-term oscillators (RSI, slow stochastics) are
bearish early today. Today, shorter-term technical
resistance comes in at the overnight high of 1,622.60 and
then at 1,635.00. Buy stops likely reside just above those
levels. Downside support for active traders today is located
at the overnight low of 1,605.80 and then at the June low of
1,597.00. Sell stops are likely located just below those
levels. Wyckoff's Intra-day Market Rating: 4.0

Nasdaq index futures: Prices are lower early today. Bulls
have the overall near-term technical advantage, but are
fading again. 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 bearish
early today. Shorter-term technical resistance is located at
the overnight high of 2,956.50 and then at 2,975.00. Buy
stops likely reside just above those levels. On the
downside, short-term support is seen at the overnight low of
2,922.50 and then at the June low of 2,897.75. Sell stops
are likely located just below those levels. Wyckoff's Intra-
Day Market Rating: 4.0.

Dow futures: Prices are lower early today. Buy stops likely
reside just above technical resistance at 15,000 and then at
15,047. Sell stops likely reside just below technical
support at 14,900 and then at the June low of 14,840.
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: 4.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are solidly lower early today
and hit another contract low. Bears have the solid overall
near-term technical advantage. 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 bearish early today. Shorter-term resistance lies at 137
even and then at the overnight high of 137 23/32. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at the overnight contract low of 135
25/32 and then at 135 even. Sell stops likely reside just
below those levels. Wyckoff's Intra-Day Market Rating: 3.0
 
September U.S. T-Notes: Prices are solidly lower early
today and hit a fresh contract low overnight. Bears have
the strong 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 bearish early today. Shorter-term
resistance lies at the overnight high of 127.20.0 and then
at 128.00.0. Buy stops likely reside just above those
levels. Shorter-term technical support lies at the
overnight contract low of 126.26.5 and then at 126.16.0
Sell stops likely reside just below those levels. Wyckoff's
Intra-Day Market Rating: 3.0

U.S. DOLLAR INDEX

The September U.S. dollar index is sharply higher in early
U.S. trading. Prices have made a strong rebound from
Wednesday’s four-month low, on safe-haven buying. Slow
stochastics for the dollar index are bullish early today.
The dollar index finds shorter-term technical resistance at
the overnight high of 82.220 and then at 82.355. Shorter-
term support is seen at the overnight low of 81.440 and then
at 81.000. Wyckoff's Intra Day Market Rating: 6.5

NYMEX CRUDE OIL

Crude oil prices are solidly lower early today. Bulls are
fading quickly after prices Wednesday hit a four-month high.
In August Nymex crude, look for buy stops to reside just
above resistance at $97.00 and then at $98.00. Look for sell
stops just below technical support at the overnight low of
$96.05 and then at $95.50. Wyckoff's Intra-Day Market
Rating: 4.0

GRAINS

Markets were lower in overnight trading, pressured by
bearish "outside market" forces that include the stronger
U.S. dollar index and solidly lower crude oil prices—as
well as the risk aversion in the market place Thursday.
Still, grain market bulls have gained some upside momentum
this week. The critical early-July timeframe for the grain
markets is approaching, and that could be prompting short
covering and fresh speculative buying interest in the
grains. Traders will closely scrutinize Thursday morning’s
weekly USDA export sales report.
 

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