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Jim Wyckoff's Morning Report: Markets Weaker Overnight

05 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Traders and investors are awaiting the next big batch of important economic data due out Thursday.

The headline event Thursday will be the European Central Bank’s monthly monetary policy meeting and the press conference by ECB president Mario Draghi afterward. The ECB meeting did produce no change in interest rates. No big policy decisions were expected after last month’s meeting, in which the ECB cut its main interest rate to a record low. However, the market place will parse Draghi’s comments at his press conference.

So far, this week’s U.S. data economic data has been upbeat and has fallen into the camp that reckons the Fed will act to “taper” its monetary policy sooner rather than later. However, the more critical economic data out this week is yet to come. This week’s data will provide at least some new insight on the timing of the Fed’s next move.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job cuts report, the second-quarter gross domestic product report, manufacturers’ shipments and orders, and ICSC chain store sales trends.

Arguably the most important economic report of the week, and of the month, is Friday’s U.S. Labor Department employment report for November. The key non-farm payrolls figure of that report is seen coming in at up around 185,000 jobs. Given Wednesday’s strong ADP national employment report, in which the jobs figure was up 215,000, many market watchers are expecting a stronger Labor Department employment report on Friday.

Wyckoff’s Daily Risk Rating: 7.0 (The economic report release pace is strong Thursday and Friday, with markets likely to react significantly to the data.)

(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), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady in early U.S. trading. Bulls are fading just a bit. 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 1,799.30 and then at the record high of 1,812.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,778.00 and then at 1,765.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly higher early today. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above 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 3,494.00 and then at this week’s high of 3,501.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3478.50 and then at this week’s low of 3,453.25. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are near steady early today. Buy stops likely reside just above technical resistance at 15,900 and then at Wednesday’s high of 15,945. Sell stops likely reside just below technical support at 15,850 and then at Wednesday’s low of 15,790. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-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: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly higher early today, on tepid short covering. The bears have the overall near-term technical advantage as prices are in a choppy, six-week-old downtrend on the daily bar chart. 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 neutral early today. Shorter-term resistance lies at the overnight high of 129 13/32 and then at 130 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 128 29/32 and then at the September low of 128 11/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are near steady early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 123.23.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.14.0 and then at 124.08.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly lower early today and hit a fresh five-week low overnight. The greenback bears have the overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.85 and then at 81.00. Shorter-term support is seen at the overnight low of 80.570 and then at 80.500. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

January Nymex crude oil prices are slightly higher early today and hit a fresh five-week high overnight. Price action this week has produced a bullish upside “breakout” on the daily bar chart, to suggest a market low is in place. A three-month-old downtrend on the daily bar chart has been negated. In January Nymex crude, look for buy stops to reside just above resistance at the overnight high of $97.72 and then at $98.00. Look for sell stops just below technical support at $97.00 and then at $96.00. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were weaker overnight. Traders are awaiting Thursday morning’s weekly USDA export sales report. Corn futures bears are still in technical control, but I don’t expect to see strong downside price pressure at these lower levels. Wheat futures have seen the technical posture improve markedly to the point that I am confident a market low is in place. Soybean bulls have the near-term technical advantage. The South American planting and growing season is off to a good start and that is a bearish factor for corn and especially soybeans.

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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