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Jim Wyckoff's Morning Report: Traders Await Employment Report

08 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Traders and investors are awaiting Friday morning’s U.S. employment report for October.

The non-farm payrolls number of that report is expected to have grown by around 120,000. The jobs report will be a gauge in helping the market place figure out when the Federal Reserve will start to wind down its quantitative easing of monetary policy.

Look for active trading in the aftermath of the report. A surprising non-farm payroll figure could prompt high volatility in many markets.

The Standard & Poors credit agency on Friday unexpectedly downgraded France’s credit rating by one notch, to AA.

The agency said France’s inability to curtail government spending prompted the move. European stock markets were pressured on the news, but the Euro currency showed little reaction.

However, if other European Union countries’ sovereign debt ratings start getting fresh downgrades, the EU sovereign debt crisis would be back on the front burner of the market place.

Asian markets were weaker Friday on renewed concerns regarding the U.S. Federal Reserve possibly starting to “taper” its monthly bond-buying program (also called quantitative easing) sooner than many expect.

A much stronger than expected third-quarter U.S. GDP reading Thursday prompted those fresh worries.

China’s Communist party meets this weekend, during which time major plans and economic reforms are unveiled by the leaders of the country. The world market place will be closely watching for any proclamations coming from that confab.

Other U.S. economic data scheduled for release Friday includes personal income and outlays and the University of Michigan consumer sentiment survey.

Friday’s Wyckoff’s Daily Risk Rating: 7.0 (U.S. jobs data is out Friday, which is likely to at least temporarily gyrate the markets.)

(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). Each morning I will look at several markets and scan the world’s news headlines to get a sense of how risk appetite in the market place will shape for the trading day. For example, extreme readings in my Daily Risk Rating would be a very bullish U.S. jobs report that would fully cheer investors—Wyckoff’s Daily Risk Rating would be 1. Conversely, a daily rating of 10 would be an unexpected military confrontation in the Middle East that included combat. Most days Wyckoff’s Daily Risk Rating will be around neutral--between 4 and 6.)

--Jim

U.S. Dollar Index

The December U.S. dollar index is slightly higher early today, on more short covering. Bulls have gained some more upside momentum this week.

Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 81.025 and then at 81.205. Shorter-term support is seen at this week’s low of 80.455 and then at 80.320. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

December Nymex crude oil prices are near steady early today. Bears still have the overall near-term technical advantage.

Prices are in a 10-week-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just above resistance at the overnight high of $94.66 and then at this week’s high of $95.40.

Look for sell stops just below technical support at the overnight low of $93.90 and then at this week’s low of $93.07. Wyckoff's Intra-Day Market Rating: 5.0

Grains

Markets were narrowly mixed overnight. Look for more active trading Friday, in the aftermath of USDA’s latest monthly supply and demand report due out just before midday.

That report is not expected to be bullish and is likely to show record U.S. corn and soybean production.

Technically, the corn bears are in firm command, while soybeans are slightly bearish on a near-term basis and wheat bears have the near-term technical advantage.

It would not surprise me to see the following scenario play out in the grains into the end of the year: Corn continues to lead soybeans and wheat steady to lower for a few more weeks, but then corn prices bottom out and that market puts in a major low.

Wheat prices will also bottom out, to form a big and bullish double-bottom reversal pattern on the daily chart. Soybean prices could grind sideways to lower into the end of the year.

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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