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Jim Wyckoff's Morning Report: Strong Outlook for US Economy

26 March 2014

GLOBAL - In overnight news, Federal Reserve Bank of St. Louis president James Bullard said the U.S. economy continues to improve and said he sees U.S. unemployment below 6% by the end of this year.

Amid a lack of major headline economic data points so far this week, focus of the market place has been on world central banks and their monetary policies. European stocks rallied in part Wednesday on ideas the European Central Bank will soon embark on further monetary policy stimulus due to concerns about deflation. And recent downbeat economic data from China has the market place buzzing that China monetary officials could also loosen money policy to help stimulate the world’s second-largest economy. Traders and investors were caught off guard last week when the U.S. Federal Reserve issued a report that was deemed as less dovish than expected given that new Fed chair Janet Yellen is generally believed to be fully in the dovish camp on monetary policy.

U.S. economic data due out Wednesday includes the weekly MBA mortgage applications survey, the advance report on durable goods, the U.S. flash services PMI, and the weekly DOE energy stocks report.

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine situation has for the moment de-escalated but is still an unsettling market factor.)

(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 firmer in early U.S. trading today. The bulls have the overall near-term technical advantage. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at last week’s high of 1,876.50 and then at the record high of 1,891.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,858.90 and then at Tuesday’s low of 1,848.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early today. 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 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 this week’s high of 3,657.00 and then at 3,675.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,622.25 and then at 3,600.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are firmer in early U.S. trading. Buy stops likely reside just above technical resistance at last week’s high of 16,375 and then at 16,400. Sell stops likely reside just below technical support at 16,300 and then at 16,250. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower early today. Bulls have the overall level near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 132 31/32 and then at this week’s high of 133 11/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 132 21/32 and then at this week’s low of 132 11/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

June U.S. T-Notes: Prices are weaker early today. Bears have the overall 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 123.14.5 and then at this week’s high of 123.18.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 123.08.5 and then at this week’s low of 123.02.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The June U.S. dollar index is firmer in early trading, on short covering. Bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 80.400 and then at the March high of 80.505. Shorter-term support is seen at the overnight low of 80.090 and then at this week’s low of 79.900. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

May Nymex crude oil prices are slightly higher in early U.S. trading. In May Nymex crude, look for buy stops to reside just above resistance at $100.00 and then at this week’s high of $100.29. Look for sell stops just below technical support at $99.00 and then at this week’s low of $98.80. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mostly weaker overnight on some more profit taking and chart consolidation. The grain market bulls still have the overall near-term technical advantage. The corn market is seeing underlying support from worries about U.S. planting delays. Soybeans are boosted by strong worldwide demand, and the wheat market sees buying interest due to the poor condition of the U.S. hard red winter crop. The March 31 USDA planting intentions report is coming into view. It’s one of the most important USDA reports of the year.

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