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Jim Wyckoff's Morning Report: Markets Weaker Overnight

12 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, industrial output in the European Union fell sharply in October—down 1.1% from September and the steepest monthly decline in a year.

Forecasts were for the number to be up 0.2%. This report is one more argument for the European Central Bank to keep its monetary policy very accommodative. ECB president Mario Draghi on Thursday reiterated his desire to keep the ECB’s easy money policy in place and he also said deflation is not a problem in the EU. However, the fact that Draghi keeps bringing up the deflation matter, amid an extended period of very low inflation in the EU, suggests he is indeed at least a bit worried about it.

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 suggests 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. This week’s U.S. government budget agreement by congressional leaders is another factor that could work in favor of the Fed tapering sooner. Remember that the last budget impasse and U.S. government shutdown played a part in the Fed holding off on a tapering move.

Gold is under selling pressure this morning, partly due to the U.S. budget deal reached this week.

U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export prices, retail sales, and manufacturing and trade inventories.

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 and hit a three-week low. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at 1,790.00 and then at 1,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,773.00 and then at 1,755.00. 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. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at the overnight high of 3,476.00 and then at 3,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,463.25 and then at 3,450.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are weaker early today. Buy stops likely reside just above technical resistance at 15,850 and then at 15,900. Sell stops likely reside just below technical support at 15,800 and then at 15,750. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady 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 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 neutral to bullish early today. Shorter-term resistance lies at the overnight high of 129 20/32 and then at 130 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 10/32 and then at this week’s low of 129 2/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are slightly lower 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 124.17.5 and then at Wednesday’s high of 124.26.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.12.0 and then at this week’s low of 124.06.5. 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 higher early today and hovering near a six-week low. The greenback bears have the overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.125 and then at Wednesday’s high of 80.215. Shorter-term support is seen at Wednesday’s low of 79.875 and then at 79.750. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

January Nymex crude oil prices are slightly higher early today. Bulls have the near-term technical advantage. In January Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at this week’s high of $98.75. Look for sell stops just below technical support at $97.00 and then at $96.50. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were weaker overnight. Grain traders are focusing on export demand for U.S. grains and will closely scrutinize Thursday morning’s weekly USDA export sales report. 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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