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Jim Wyckoff's Morning Report: Markets Mixed Overnight

08 January 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The headline risk in the market place picks up Wednesday as the Federal Reserve’s FOMC minutes are released in the afternoon.

Traders and investors want to see in more detail why FOMC members decided at their December meeting to begin scaling back (tapering) the quantitative easing of the Fed’s monetary policy—and if the FOMC minutes hold any clues for future Fed actions.

The ADP national employment report is also out Wednesday morning, which could also impact the markets ahead of Friday’s key monthly jobs report from the U.S. Labor Department. The ADP report is seen adding 200,000 jobs in December, which is what the Labor Department jobs report is also expected to show on Friday morning.

The European Central Bank and Bank of England hold their monthly meetings on Thursday. There is also important economic data coming out of China late this week—trade and inflation figures.

In overnight news, the European Union reported that its retail sales pace in November was the best in a dozen years, at up 1.4% from October and up 1.6% year on year. The consensus forecast was for just a 0.1% rise. German manufacturing orders also rose in November. However, this upbeat data from the Euro zone failed to support the Euro currency against the other majors.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the weekly DOE liquid energy stocks report, consumer installment credit and the FOMC minutes.

Wyckoff’s Daily Risk Rating: 7.0 (Today’s U.S. ADP jobs report and FOMC minutes could move the 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 lower in early U.S. trading, on mild profit taking. 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 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 this week’s high of 1,834.50 and then at 1,840.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,817.50 and then at 1,810.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady 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 Tuesday’s high of 3,557.25 and then at 3,566.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,535.00 and then at 3,525.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are slightly lower early today. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,492 and then at the record high of 16,535. Sell stops likely reside just below technical support at Tuesday’s low of 16,425 and then at 16,400. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-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 weaker early today. The bears have the solid overall near-term technical advantage as prices are in a 10-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 8/32 and then at this week’s high of 129 12/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 2/32 and then at Tuesday’s low of 128 29/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

March U.S. T-Notes: Prices are lower early today. Prices are in a 10-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 123.19.5 and then at Tuesday’s high of 123.22.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 123.13.0 and then at 123.08.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The March U.S. dollar index is higher early today and hit a fresh six-week high overnight. The greenback bulls have gained upside momentum recently. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.205 and then at 81.500. Shorter-term support is seen at the overnight low of 80.980 and then at this week’s low of 80.690. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

February Nymex crude oil prices are firmer early today and seeing short covering after hitting a five-week low Monday. Bears still have the overall near-term technical advantage. A bearish pennant pattern has formed on the daily bar chart. In February Nymex crude, look for buy stops to reside just above resistance at this week’s high of $94.59 and then at $95.00. Look for sell stops just below technical support at the overnight low of $93.70 and then at this week’s low of $93.20. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed overnight. Trading the next two days is likely to be quieter in the grains, as traders are awaiting Friday morning’s USDA quarterly grain stocks report. Technically, corn, soybean and wheat futures bears are in near-term control. Corn and soybean traders will continue to keep an eye on South American weather, which so far has not been significantly worrisome for the crops. An arctic blast in the U.S. does not so far have wheat growers too worried about winter kill.

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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