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Jim Wyckoff's Morning Report: Markets Slightly Higher Overnight

19 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The highly anticipated U.S. Federal Reserve Open Market Committee (FOMC) meeting, statement and press conference by outgoing Fed Chairman Ben Bernanke are over, and in the aftermath it looks like, at least for the near term, the winners are the U.S. stock market and the U.S. dollar.

The loser is the gold market. While investors, traders and market watchers had pretty much factored into most markets’ prices Wednesday’s FOMC news, the surprise to many was that the stock market rallied sharply.

The argument from the stock market bulls is that the FOMC statement “threaded the needle” and was not too hawkish and not too dovish. Or in other words the U.S. economy is growing to the point of not being a big worry to the market place any more, yet the Fed is in no hurry to tap the brakes too hard on its still-very-easy monetary policy.

The gold market and other raw commodity markets are seeing two significant negatives on the morning after the Fed tapering announcement: 1. a stronger U.S. dollar index. 2. money flows that see more funds moving into equities, at the expense of all other investment asset classes.

I am still in the camp that sees the major bull run in the stock market at the tail end of its life. The fact that even more market watchers got stock-market-bullish after the FOMC statement makes me even more convinced the bull run in stocks sees its days numbered.
While there still may (or may not) be more upside in the U.S. stock indexes in the near term, the vast majority of the energy has already been expended by the bulls, as they have pushed the major stock indexes to record or multi-year highs. Once the money starts to flow out of the stock market, other asset classes will then quickly benefit.

U.S. economic data due for release Thursday includes the weekly jobless claims report, leading economic indicators, the Philadelphia Fed business survey, and existing home sales.

Wyckoff’s Daily Risk Rating: 5.0 (No major headline risk today, and with holidays approaching, trading volumes are likely to wane.)

(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 lower in early U.S. trading, on mild profit taking after strong gains posted Wednesday. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,806.10 and then at the record high of 1,812.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,798.90 and then at 1,786.20. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are weaker early today on profit taking from Wednesday’s strong gains. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above 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 the overnight high of 3,512.75 and then at the December high of 3,524.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,480.00 and then at 3,465.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady early today as the market pauses after big gains scored on Wednesday. Buy stops likely reside just above technical resistance at the record high of 16,160 and then at 16,200. Sell stops likely reside just below technical support at 16,050 and then at 16,000. Shorter-term moving averages are still 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 bullish early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly lower early today, but not far from where prices were before the Fed tapering announcement. The bears still 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 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 129 20/32 and then at 130 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 129 2/32 and then at Wednesday’s low of 128 13/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are lower early today and hovering near a 3.5-month low. 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 bearish early today. Shorter-term resistance lies at 124.00.0 and then at the overnight high of 124.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the December low of 123.24.0 and then at 123.20.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 3.0

U.S. DOLLAR INDEX

The March U.S. dollar index is higher early today and hit a two-week high overnight. The greenback bulls have quickly gained upside momentum. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.805 and then at 81.000. Shorter-term support is seen at 80.570 and then at 80.400. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

January Nymex crude oil prices are near steady again 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 slightly higher overnight, on tepid short covering following recent selling pressure. Traders will get some fresh USDA weekly export sales news this morning. The stronger U.S. dollar index is a negative outside market factor today. Grain markets are seeing the holiday doldrums set in. Technically, corn and wheat futures bears are in full control. Soybean bulls still 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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