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Jim Wyckoff's Morning Report: Markets Firmer Overnight

21 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The U.S. Federal Reserve’s FOMC minutes released Wednesday afternoon were deemed somewhat hawkish by the market place.

Several members of the committee said at their October meeting they could see the Fed tapering its $85 billion-a-month bond-buying program at “one of its next few meetings.” The committee members also saw the U.S. economy growing at a “moderate” pace.

However, there is still a large contingent of market watchers who said the latest FOMC minutes revealed not much new and said any Fed tapering move will first have to see better U.S. jobs data. This puts the U.S. employment report in early December very high on traders’ and investors’ watch lists.

It was reported Thursday that China’s HSBC preliminary manufacturing report for November came in at 50.4 versus the final reading of 50.9 in October. Any reading above 50.0 suggests economic growth. However, the market place took the China data as a bit downbeat.

In other overnight news, European Central Bank president Mario Draghi said the European Union has seen “disinflation” for several months. He said he does not expect deflation to grip the EU, but added the ECB needs to take measures to prevent deflation, such as the recent interest rate cut by the ECB. It’s my bias that the world’s central bankers are more worried about deflation setting in for a long period of time than they are presently letting on. This could mean the central banks will try to keep their stimulative monetary policies in place for as long as possible--and longer than the market place presently reckons.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index, the U.S. flash manufacturing PMI, and the Philadelphia Fed business outlook survey.

Wyckoff’s Daily Risk Rating: 5.0 (With the FOMC minutes out of the way, the market place does not have much news headline risk at present.)

(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. STOCK INDEXES

S&P 500 futures: Prices are slightly higher in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 1,793.70 and then at Monday’s record high of 1,799.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 1,775.50 and then at 1,765.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Wednesday’s high of 3,398.50 and then at this week’s high of 3,425.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 3,358.50 and then at 3,350.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer early today. Buy stops likely reside just above technical resistance at 15,950 and then at the record high of 15,990. Sell stops likely reside just below technical support at Wednesday’s low of 15,840 and then at 15,800. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly lower early today and hit a two-month low overnight. The bears are gaining downside momentum. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 139 26/32 and then at 130 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 5/32 and then at 129 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are slightly lower early today. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 125.02.5 and then at 125.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.26.0 and then at the November low of 124.14.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The March U.S. dollar index is weaker early today, on a corrective pullback from decent gains posted Wednesday. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.505 and then at the November high of 81.735. Shorter-term support is seen at 81.00 and then at Wednesday’s low of 80.750. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

January Nymex crude oil prices are near steady early today and hovering not far above last week’s 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 January Nymex crude, look for buy stops to reside just above resistance at Wednesday’s high of $94.48 and then at $95.00. Look for sell stops just below technical support at the overnight low of $93.47 and then at last week’s low of $93.17. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were firmer overnight on short covering. Traders are awaiting this morning’s weekly USDA export sales report. Focus of the market place has turned more to the demand side of the equation, now that the U.S. harvest is virtually complete. Technically, corn bears are in firm command. Soybean bulls have faded a bit, while wheat bears are in full control.

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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