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Wyckoff's Morning Report: Markets Mixed Overnight

10 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, European Central Bank president Mario Draghi said the EU is not headed for a deflationary debacle like that of Japan—even though EU inflation is very low and is expected to remain that way for quite some time.

His comments suggest the ECB will keep its very easy money policies for a long time to come.

Traders and investors are looking forward to next week’s meeting (Dec. 17-18) of the U.S. Federal Reserve’s Open Market Committee (FOMC). Recent upbeat U.S. economic data, including a stronger-than-expected U.S. jobs report last Friday, suggest the Fed might move up its timeline for implementing a tapering of its monthly bond-buying program, also called quantitative easing, including some who think the Fed will announce a tapering at next week’s FOMC meeting. The steady drumbeat of speculation on the precise timing of Fed tapering has done two things to the market place: One, it has numbed traders and investors to the actual event, which is likely to lessen its significance when it does actually occur. And two, the markets have already mostly factored into their price structures the Fed tapering, when it does occur. The actual surprise to the market place now would be a string of weak U.S. economic data that puts off Fed tapering for several months—but that is unlikely.

U.S. economic data due for release Tuesday includes the Manpower quarterly employment survey, the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the ISM semiannual report on business.

Wyckoff’s Daily Risk Rating: 5.0 (There is not much in the way of important worldwide economic data due out until next week’s FOMC meeting. Thus, trading activity is likely to be more subdued until the middle of next week.)

(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 slightly higher in early U.S. trading and hovering very close to the recent record high. 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the record high of 1,812.30 and then at 1,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,800.00 and then at 1,790.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher early today and hit another 13-year high overnight. 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 bullish early today. Shorter-term technical resistance is located at the overnight high of 3,524.25 and then at 3,535.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 3,505.00 and then at 3,477.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are slightly higher early today. Buy stops likely reside just above technical resistance at Monday’s high of 16,050 and then at 16,100. Sell stops likely reside just below technical support at 16,000 and then at 15,950. Shorter-term moving averages are neutral early today, as the 4-day moving average is below 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 higher early today, on more short covering after hitting a contract low last Friday. The bears still have the overall near-term technical advantage as prices are in a seven-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 bullish early today. Shorter-term resistance lies at the overnight high of 129 17/32 and then at 130 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 15/32 and then at Monday’s low of 129 2/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

March U.S. T-Notes: Prices are higher early today, on more short covering after hitting an 11-week low last Friday. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 124.22.5 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.12.5 and then at Monday’s low of 124.06.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly lower early today and hit another six-week low overnight. The greenback bears have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.310 and then at Monday’s high of 80.490. Shorter-term support is seen at the overnight low of 80.175 and then at 80.000. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

January Nymex crude oil prices are solidly higher early today. Prices hit a six-week high overnight. Bulls have the firm near-term technical advantage. In January Nymex crude, look for buy stops to reside just above resistance at the overnight high of $98.74 and then at $99.00. Look for sell stops just below technical support at $98.00 and then at $97.50. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed overnight. Traders are awaiting the latest monthly USDA supply and demand report Tuesday morning. Corn and wheat futures bears are still in full technical control. Soybean bulls still have the near-term technical advantage and are gaining more upside momentum. However, I cannot see this divergence between corn and wheat (bearish), and soybean prices (bullish) continuing. Either corn and wheat will have to pull out of their bearish ways, or soybean prices will back off or at least stabilize. One or the over is likely to occur very soon.

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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