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Jim Wyckoff's Morning Report: Nikkei Stock Drops

13 June 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Japan’s Nikkei stock index is in bear territory after dropping 6% on Thursday and is now down over 20% from last month’s high.

The Japanese yen also hit a two-month high against the U.S. dollar. China’s Shanghai stock index hit a six-month low as Chinese investors returned from a public holiday. Other Asian and European stock markets were also lower Thursday, which also has the U.S. stock indexes poised for a lower opening. The world market place continues to fret about the major central banks of the world taking away the easy-money punch bowl from the party. This week has seen heightened risk aversion in the worldwide market place. 

Worrisome to traders and investors worldwide is not only the steep stock market declines in Asia, but also the sell-off in many periphery currencies in the foreign exchange market this week, along with recently rising government bond yields worldwide. Savvy traders and investors are now seriously worried that the bear market in Japan’s equities will soon spill over into the same for the U.S. stock market. Even the usual safe-haven assets have not been immune from this week’s “when in doubt, get out” trader mentality. Gold, the U.S. dollar index and U.S. Treasuries have all seen significant selling pressure this week. There is a heavier slate of U.S. economic data due out Thursday, but the next major market event on the docket is next Wednesday’s Federal Reserve Open Market Committee (FOMC) meeting, at which time the U.S. central bank will discuss its current monetary policy and whether to make any changes to it. Fed Chairman Bernanke will also hold a press conference following that meeting. U.S. economic data due for release Thursday
includes the weekly jobless claims report, import and export price indexes, retail sales, and manufacturing and trade inventories.

US Dollar Index

The September U.S. dollar index is lower again in early U.S. trading and hit a fresh four-month low overnight. Bears have downside near-term technical momentum. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.080 and then at Wednesday’s high of 81.510. Shorter-term support is seen at the overnight low of 80.710 and then at 80.500. Wyckoff's Intra Day Market Rating: 4.0

NYMEX Crude Oil

Crude oil prices are slightly lower early today. Not much new. Bulls and bears are still on a level near-term technical playing field amid choppy trading recently. In July Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at this week’s high of $96.45. Look for sell stops just below technical support at $95.00 and then at Wednesday’s low of $94.46.  Wyckoff's Intra-Day Market Rating: 4.5

Grains

Markets were mixed in overnight trading, but with a bearish tone. The risk aversion in the market place Thursday could lead to some selling pressure in the grains as the day progresses. Traders will closely examine Thursday morning’s weekly USDA export sales report. Soybean bulls still have
the near-term technical advantage. Corn bulls have faded following a bearish USDA report on Wednesday. Wheat bears remain in technical control as bears gained some downside momentum following Wednesday’s bearish USDA data. Weather in the U.S. Corn Belt will remain a dominant fundamental factor for the grains in the near term, although it has turned more benign this week.

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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