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Jim Wyckoff's Morning Report: Markets Mixed Overnight

15 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place is still buzzing about the “dovish” remarks made Thursday by Federal Reserve Chair nominee Janet Yellen to the U.S. Senate Banking Committee.

During questioning by senators Yellen said U.S. monetary policy needs to remain very accommodative so that the U.S. economy can grow faster and unemployment can decline further.

Yellen also said she would continue current Fed Chairman Ben Bernanke’s monetary policies and said the U.S. economy still needs monetary stimulus because it is performing below its potential. Not
unexpectedly, the market place read Yellen’s remarks as being in the dovish monetary policy camp.

While Yellen’s remarks were not surprise to the market place, it seems the market place has moved back its collective timeframe for the Fed to begin “tapering” its quantitative easing of U.S. monetary policy—or at least the matter has become more of an uncertainty.

Some market watchers think the Fed may announce it is cutting back on its monthly bond-buying program at its mid-December FOMC meeting.

However, other market watchers don’t expect the Fed to make any tapering move until the second quarter of 2014, at the earliest. I presently fall into the camp of the latter.

Recent U.S. economic data has just not been strong enough to meet the Fed’s own criteria for backing off on their printing of money.

By the way, the market place also read the well-spoken Yellen’s testimony to the Senate committee on Thursday as very well received by the senators. Many TV commentators said the senators treated Yellen with “kid gloves.”

This strongly hints she will breeze through the confirmation process on her way to becoming the next head of the U.S. central bank.

In other news, the European Union released another very low inflation report Friday, showing a four-year-low reading of 0.7% in October, on an annualized basis.

This low reading will allow the European Central Bank to also maintain its very accommodative monetary policy for quite some time to come.

U.S. economic data due for release Friday includes the Empire State manufacturing survey, industrial production and capacity utilization and monthly wholesale trade inventories.

Thursday’s Wyckoff’s Daily Risk Rating: 5.0 (The market place remains calm heading into the weekend.

It’s been a while since major geopolitical issues impacted the market place. That makes me wonder how long this calmness will last.)

(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).

--Jim

U.S. DOLLAR INDEX

The December U.S. dollar index is near steady early today. Slow stochastics for the dollar index are bearish early today.

The dollar index finds shorter-term technical resistance at the overnight high of 81.210 and then at
81.350. Shorter-term support is seen at this week’s low of 80.800 and then at 80.500. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

December Nymex crude oil prices are near steady early today. Prices Thursday hit a 4.5-month low. Bears have the overall near-term technical advantage.

Prices are in an 11-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 $94.30 and then at $95.00. Look for sell stops just below technical support at $93.00 and then at Wednesday’s low of $92.51. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were again mixed overnight. Traders will get some fresh news this morning, with the weekly USDA export sales report, delayed by one day due to the U.S. holiday on Monday. Corn bulls have faded again.

Soybean bulls still have some upside technical momentum. Wheat is still technically bearish but will remain a follower for at least the near term.

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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