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Jim Wyckoff's Morning Report: 'Risk-off' Attitudes in Market Place

23 May 2013
Jim Wyckoff Commentary -  TheCropSite

US - There are keener “risk-off” trader attitudes in the market place Thursday, which has the gold market seeing good safe- haven demand—something the yellow metal has not experienced in quite some time.

The Japanese stock market tumbled overnight and the Japanese yen rallied in the wake of the U.S. stock market losses Wednesday, and on some fresh, weak economic data coming out of China.

Japan’s Nikkei stock index fell by 7% Thursday. European stock markets were also sharply lower, which in turn led to follow-through selling in the U.S. stock indexes in pre-market electronic trading
Thursday morning.

China manufacturing data issued Thursday came in weaker than expected. The preliminary China HSBC manufacturing PMI dropped to a seven-month low of 49.6 in May.

A number below 50.0 indicates contraction. The world market place is still digesting Wednesday’s remarks from U.S. Federal Reserve Chairman Ben Bernanke, in which he said it’s possible the Fed could start to back off on its quantitative easing of monetary policy as soon as this
summer.

Bernanke’s comments and the Fed’s FOMC minutes Wednesday were far from conclusive on the timing of the Fed ending QE.

However, the market place read the developments as leaning to the hawkish side and the door being opened just a little wider for the Fed winding down QE sooner rather than later. In the European Union, there was more weak economic data released Thursday.

The Markit purchasing managers’ survey for the Euro zone came in at 47.7 in May from 46.9 in Apri —below the 50.0 threshold, which suggests contraction. There was another dour assessment of the European Union economy from an EU official Thursday.

Ewald Nowatny, a member of the European Central Bank’s governing council, said there is no improvement in sight for the EU economy.

The EU economy has been in contraction for the past year and a half. The U.S. dollar index is sharply lower Thursday morning, on a corrective technical pullback from recent gains that pushed the greenback to a 9.5-month high this week.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the flash manufacturing PMI, the monthly house price index, new residential sales, and the Kansas City Fed manufacturing survey. - Jim

U.S. Dollar Index

The U.S. dollar index is lower in early U.S. trading, on a technical correction and profit-taking pullback after hitting a fresh 9.5-month high overnight. Bulls still have the overall near-term technical advantage.

Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 84.220 and then at the overnight high of 84.595. Shorter-term support is seen at the overnight low of 83.845 and then at this week’s low of 83.520. Wyckoff's Intra Day Market Rating: 4.0

NYMEX Crude Oil

Crude oil prices are lower early today. Bulls are fading. In July Nymex crude, look for buy stops to reside just above resistance at $94.00 and then at $95.00.

Look for sell stops just below technical support at the overnight low of $92.67 and then at last week’s low of $92.40. Wyckoff's Intra-Day Market Rating: 4.0

Grains

Markets were again narrowly mixed in overnight trading. Corn bulls gained upside technical momentum with Wednesday’s solid gains. Soybean bulls are making a solid move higher and have good upside technical momentum.

Soybeans see a tight U.S. cash market, too. What remains the weak sister of the grains complex. Weather in the U.S.

Corn Belt is still a main focus for grain traders. Showers and thunderstorms recently, and more in the forecast, are still delaying seeding of corn and soybeans.

Traders will closely examine Thursday morning’s weekly USDA export sales report.

TheCropSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.



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