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Jim Wyckoff's Morning Report: Some Anxiety in the Market Place

27 January 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - There is some anxiety in the market place Monday, as some emerging market currencies are stressed, including the Argentine peso, the South African rand and Turkish lira.

The beneficiaries of the nervousness have been the perceived safe-haven investment assets: gold and U.S. Treasuries. Asian and European stock markets sold of Monday, following Wall Street’s lead on Friday. Prompting the secondary currencies to sell off are concerns about a financial system liquidity problem that has developed in China, and following China’s disappointing economic data released last week. There are also worries the U.S. Federal Reserve will continue to reel in its easy-money policy this week, which ostensibly soaks up some liquidity in the world market place, starting with the periphery currencies.

Tuesday and Wednesday the Federal Reserve’s Open Market Committee (FOMC) meets to set its monetary policy. There is a general belief, albeit not a clear consensus, that the Fed will do another $10 billion tapering of its monthly bond-buying program, also called quantitative easing.

In other overnight news, there was an upbeat German Ifo business confidence index report Monday. The index hit its highest level in two and one-half years and continues a string of upbeat economic data coming out of the European Union.

U.S. economic data due for release Monday includes new residential sales and the Texas manufacturing outlook survey.

Wyckoff’s Daily Risk Rating: 7.0 (The market place is not in full panic mode by the secondary currencies being in turmoil, but there is keener uncertainty among traders and investors to start the new trading 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.

US Stock Indexes

S&P 500 futures: Prices are higher in early U.S. trading, on a corrective bounce after hitting a fresh six-week low overnight. Bulls have faded recently. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 1,800.00 and then at 1,810.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,876.80 and then at the December 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 firmer early today on short covering from Friday’s big price drop. Price action last week produced a bearish “key reversal” down on the daily chart, which is one clue that a market top is in place. 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 3,550.00 and then at 3,575.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,520.25 and then at 3,500.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer in early U.S. trading on a short-covering bounce after hitting a six-week low overnight. Bulls have faded quickly. Buy stops likely reside just above technical resistance at 15,900 and then at 15,950. Sell stops likely reside just below technical support at 15,800 and then at 15,750. 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

US Treasury Bonds and Notes

March U.S. T-Bonds: Prices are weaker early today on profit taking after hitting a fresh three-month high early today. The bulls still have good upside near-term technical momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 133 even and then at the overnight high of 133 8/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 16/32 and then at 132 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are weaker on profit taking after hitting a two-month high on Friday. Bulls have gained some upside technical momentum. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 125.00.0 and then at the overnight high of 125.09.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.26.5 and then at the 124.21.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

US Dollar Index

The March U.S. dollar index is firmer early on short covering after hitting a three-week low Friday. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Friday’s high of 80.640 and then at 80.750. Shorter-term support is seen at the overnight low of 80.390 and then at Friday’s low of 80.220. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

March Nymex crude oil prices are firmer early today. Bulls still have upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at $97.50 and then at last week’s high of $97.84. Look for sell stops just below technical support at the overnight low of $96.60 and then at $96.00. Wyckoff's Intra-Day Market Rating: 5.5

Grains

Markets were mixed to firmer overnight, with gains somewhat limited amid the “risk-off” trading atmosphere that has developed the past two trading sessions. Technically, soybean bulls have faded. Corn bulls remain very weak. Wheat bears are also in full technical command. Traders will closely examine this morning’s weekly export inspections report. The demand side of the equation for grains will continue to be a major market factor in the grain markets. Grain market bulls are also worried about the seasonal “February Break” phenomenon that seems to pressure the grain futures markets about this time every year.

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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