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Jim Wyckoff's Morning Report: Markets Lower Overnight

13 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the U.S. dollar hit a five-year high against the Japanese yen in the currency markets.

Notions the Japanese central bank will continue to try to inflate its economy by printing money, whereas the U.S. Federal Reserve is set to back off its easy-money accelerator, are the main force pushing Dollar-Yen higher.

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 and this week’s U.S. government budget deal suggest the Fed will move up its timeline for implementing a tapering of its monthly bond-buying program, also called quantitative easing.

A growing number of market watchers think the Fed will announce a tapering at next week’s FOMC meeting. Many traders and analysts reckon the actual announcement of the Fed tapering will cause high volatility in markets. I’m taking the other side of that trade. While market prices could jiggle a bit in the immediate aftermath of the announcement, I don’t think markets will experience unsettling high volatility. Reason: Traders and investors have had many weeks to digest and factor into market prices the near certainty that the Fed will taper at next week’s meeting, or early next year.

U.S. economic data due for release Friday includes the producer price index.

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 firmer in early U.S. trading but did hit a four-week low overnight. 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 Thursday’s high of 1,783.00 and then at 1,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,767.40 and then at 1,755.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher 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 Thursday’s high of 3,479.50 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 3,452.50 and then at 3,435.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer early today. But bulls have faded recently. Buy stops likely reside just above technical resistance at 15,750 and then at Thursday’s high of 15,775. Sell stops likely reside just below technical support at Thursday’s low of 15,650 and then at 15,600. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

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 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 this week’s low of 129 2/32 and then at 128 31/32. 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 to bearish early today. Shorter-term resistance lies at the overnight high of 124.10.0 and then at Thursday’s high of 124.17.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.03.5 and then at 124.00.0. 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 higher early today on short covering in a bear market. The greenback bears still 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 80.570 and then at 80.750. Shorter-term support is seen at the overnight low of 80.305 and then at 80.000. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

January Nymex crude oil prices are lower early today on profit taking. Bulls still have the overall near-term technical advantage. In January Nymex crude, look for buy stops to reside just above resistance at the overnight high of $97.62 and then at $98.00. Look for sell stops just below technical support at $96.50 and then at $96.00. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were lower overnight. Grain markets are suffering from a lack of fresh, bullish fundamental news. Technically, corn and wheat futures bears are still in full control. Soybean bulls have the near-term technical advantage. My bias is that corn and wheat prices do not have much more downside potential given their mature bear market status. My bias is also that soybean prices do not have much more upside potential, mainly because corn and wheat prices have been beaten down.

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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