Wednesday, May 31--Jim Wyckoff's Early Morning Web Log

U.S. ECONOMIC REPORTS

On tap today is the ICSC store sales index, Redbook retail sales index, the Chicago Purchasing Managers index and the FOMC minutes release from the May 10 meeting.

U.S. STOCK INDEXES

The indexes were higher in overnight electronic trading following strong losses Tuesday. However, Tuesday's price action produced more near-term chart damage to suggest there may still be some down-trending price action in the near term. But I don't look for any strong price trends to develop in the indexes. More likely is choppier and more sideways trading action heading into the normally quieter summer months.

September S&P 500: The shorter-term moving averages (9- and 18-day) are still bearish. However, the 4-day moving average has moved above the 9-day and produce a minor buy signal. But Tuesday's big down day did produce near-term chart damage. Now, key shorter-term technical support today comes in at Monday's low of 1,270.00. Sell stops likely reside just under this price level. Major support is seen at the May low of 1,259.50. Key upside resistance for active traders today is the 1,280.00 level. Buy stops are likely just above that price level.

September Nasdaq: The shorter-term moving averages (4- 9- and 18-day) are still bearish. Tuesday's big downside price action produced more near-term chart damage. Key shorter-term technical support for today is the May low of 1,1583.00. Heavy sell stops likely reside below that level. On the upside, short-term resistance is seen at the 1,620.00 level. Buy stops are likely located just above that level.

September Dow: Chart damage was inflicted with Tuesday's big losses. The next major shorter-term downside objective for the bears is closing prices below solid support at the May low of 11,150 price level. Heavy sell stops likely reside just below that level. Buy stops likely reside just above shorter-term technical resistance at Tuesday's high of 11,330.

U.S. TREASURY BONDS AND NOTES

Both notes and bond prices were firmer in overnight and early open-outcry trading in Chicago. However, bears are still in overall near-term technical control of both bonds and notes. Rallies are still selling opportunities at this point.

September U.S. T-Bonds: Shorter-term moving averages (4- 9- 18-day) are again turning bearish. The 4-day moving average has moved below the 9-day average. The next short-term upside price objective for the bears today is pushing prices above shorter-term resistance at 107 even. Buy stops likely lie just above that level. A push below support at last week's low of 106 13/32 would provide the bears with fresh short-term downside technical momentum. Sell stops likely reside just below that level.

September U.S. T-Notes: Prices are firmer in early morning dealings. Buy stops likely reside just above shorter-term resistance at 105.16.5. Shorter-term moving averages are turning bearish. The 4-day moving average has just moved below the 9-day average today. A move in prices below shorter-term support at last week's low of 105.04.0 likely would uncover some sell stops just below that level.

CURRENCIES

The September U.S. dollar index is slightly higher in early morning dealings and the currencies are slightly lower. Prices are just correcting a bit today, following a big sell off in the dollar index Tuesday and big gains in the other currencies. Price action has become choppier in the currencies, heading into summertime. Recent price trends (down on the DX and up in the currencies) have now weakened a bit, but are still in place. The September U.S. dollar index finds key shorter-term technical support at Tuesday's low of 83.65 and resistance at last week's high of 84.90. Key shorter-term technical support in the September Euro today is located at 1.2900. Sell stops likely reside just below that level. Shorter-term technical resistance for the Euro is seen at 1.3000--Tuesday's high. Buy stops likely reside just above that key price level.

METALS

The metals are narrowly mixed in early morning dealings, but do feel a bit "heavy" today, following strong gains in gold and silver Tuesday. A firmer dollar index today will help out the metals bears. Key shorter-term technical support for August gold today is the $650.00 level. Sell stops likely reside just below that level, while buy stops likely reside just above shorter-term resistance at $671.50 in August gold--Tuesday's high.

ENERGIES

Prices are lower in early electronic dealings, on news that the U.S. may not be aggressive in using military action against Iran if the stalemate over nuclear enrichment in Iran continues. The weekly DOE energy report is delayed by a day, until Thursday, due to the Memorial Day holiday. In July crude oil, look for buy stops to reside just above resistance at Tuesday's high of $72.75. Look for sell stops just below support at $71.00. I still look for more trading within a range--bound by key near-term support at $68.00 in July crude and solid resistance at $75.00. A drop below the aforementioned trading range--including multiple closes below it--would then likely mean a trading range in crude oil prices between $65.00 and $70.00. It's very likely going to take another geopolitical market "shock" to move crude above $75.00.

GRAINS

Prices were solidly lower in overnight electronic trading, following weekly USDA crop progress reports that showed the corn and soybean plants off to a very good start early in the growing season. Wheat was also under pressure, despite the weekly USDA reports showing further deterioration of the U.S. HRW wheat crop. Weather forecasts are heating up for the Corn Belt. However, if the weather does behave normally and is benign, then it still would not surprise me to see weakness in grains into early July. Grains will continue to closely track the "outside markets" like crude and gold.