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Wyckoff's Report: US Federal Reserve Open Market Committee Meeting Wraps Up

18 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Today is the day. The highly anticipated U.S. Federal Reserve Open Market Committee (FOMC) meeting ends in early afternoon with a statement and then a press conference from outgoing Fed chairman Ben Bernanke.

Recent upbeat U.S. economic data and last 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—possibly as early as today. However, there is no clear consensus on precisely when the Fed will make its move.

Some traders and analysts reckon the actual announcement of the Fed tapering will cause high volatility in markets. While market prices are likely to gyrate in the immediate aftermath of the announcement, I don’t look for markets to experience extreme or 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 some point soon.

One positive regarding a tapering announcement on Wednesday would be that the market place can move on to other matters after beating this dead horse for quite some time.

European stock markets were firmer overnight, boosted in part by another upbeat economic report coming out of Germany. The Ifo business confidence index rose to 109.5 in December from 109.3 in November, which is the highest reading since April of 2012. However, somewhat mitigating the stronger German number was news that construction output in the European Union fell 1.2% in October, from September—the second straight monthly drop and the sharpest decline since January.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential construction, and the weekly DOE energy stocks report.

Wyckoff’s Daily Risk Rating: 8.0 (Wednesday afternoon’s FOMC statement could cause at least a brief burst of high price volatility in many markets.)

(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 slightly higher in early U.S. trading. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 1,786.20 and then at 1,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,770.50 and then at this week’s low of 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 slightly 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 and 18-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 Tuesday’s high of 3,479.00 and then at this week’s high of 3,491.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 3,456.25 and then at 3,450.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are slightly higher early today. Buy stops likely reside just above technical resistance at this week’s high of 15,875 and then at 15,900. Sell stops likely reside just below technical support at 15,800 and then at Tuesday’s low of 15,780. 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 neutral early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly lower early today. The bears have the overall near-term technical advantage as prices are in a two-month-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 this week’s high of 130 5/32 and then at 130 11/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 129 16/32 and then at last 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 near steady early today. Shorter-term moving averages (4- 9- 18-day) are still 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 bullish early today. Shorter-term resistance lies at the overnight high of 124.19.5 and then at 124.30.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.10.0 and then at last week’s low of 124.03.5. 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 higher early today, on tepid short covering. The greenback bears still have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 80.370 and then at Tuesday’s high of 80.445. Shorter-term support is seen at Tuesday’s low of 80.135 and then at 80.000. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

January Nymex crude oil prices are near steady early today. Bulls still have the slight overall near-term technical advantage. In January Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at $98.50. 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 narrowly mixed overnight. Grain markets are seeing the holiday doldrums set in. Corn got a bit of a boost Tuesday on some fresh export demand for U.S. corn.

The South American soybean and corn crops are a mixed bag for corn and soybean futures. Reports Tuesday said hot temps at 90 degrees, or above, were hurting the corn crop, but that beneficial moisture is helping the bean crop. Technically, corn and wheat futures bears are 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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