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Jim Wyckoff's Morning Report: Markets Firmer Overnight

11 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In a surprise move late Tuesday, U.S. government lawmakers reached a bipartisan agreement on a budget deal that should avoid the debacle that occurred just a few months ago, which forced the U.S. government to shut down for two weeks.

The markets have shown little reaction to the news. However, it’s one more unstable element taken away from a market place that has already been remarkably void of market-sensitive geopolitical uncertainty for weeks.

In overnight news, reports said China’s banks increased their lending in November, which is a signal Chinese monetary officials want to continue to stimulate their economy even though the added liquidity in the financial system could be inflationary.

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 a growing number who think the Fed will announce a tapering at next week’s FOMC meeting. The intense speculation on the precise timing of Fed tapering has done two things to the market place: It has numbed traders and investors to the actual event, which is likely to lessen its significance when it does actually occur. And the markets have already mostly factored into their price structures the Fed tapering, when it does occur.

U.S. economic data due for release Wednesday is light and includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.

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 lower in early U.S. trading, but not far below the recent record high. 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 the overnight high of 1,807.70 and then at 1,812.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,790.00 and then at last week’s low of 1,778.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly lower early today and hovering not far below the recent 13-year 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at this week’s 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 this week’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: 4.5.

Dow futures: Prices are near steady early today. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,015 and then at this week’s high of 16,050. Sell stops likely reside just below technical support at Tuesday’s low of 15,965 and then at this week’s low of 15,920. 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: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are lower early today. The bears 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 neutral early today. Shorter-term resistance lies at the overnight high of 130 6/32 and then at this week’s high of 130 11/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 26/32 and then at Tuesday’s low of 129 15/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

March U.S. T-Notes: Prices are weaker early today. 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 neutral early today. Shorter-term resistance lies at the overnight high of 124.26.5 and then at this week’s high of 124.30.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.20.5 and then at Tuesday’s low of 124.12.5. 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 slightly lower early today and hovering near Tuesday’s six-week low. 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 80.215 and then at Tuesday’s high of 80.310. Shorter-term support is seen at Tuesday’s low of 80.000 and then at 79.750. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

January Nymex crude oil prices are slightly lower early today. Prices did poke to 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 $98.75 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: 5.0

GRAINS

Markets were firmer overnight on short covering. Tuesday’s
monthly USDA supply and demand report was bearish for wheat, slightly bullish for corn and neutral for soybeans. However, traders quickly digested that report and have moved on to focusing on export demand for U.S. grains. Technically, corn and wheat futures bears are still in full control. Soybean bulls have the near-term technical advantage.

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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