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Jim Wyckoff's Morning Report: World Markets Stabilize

28 January 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - World stock and financial markets have stabilized Tuesday amid worries about some non-major world currencies being stressed.

Recent weaker Chinese economic data and concern about the U.S. Federal Reserve reeling in its very easy monetary policy are credited with pressuring several secondary world currencies in recent trading sessions. While markets have calmed a bit Tuesday, the secondary currencies’ ailments have not vanished and market place anxiety could quickly resurface.

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. A CNBC survey of 45 economists released Tuesday morning saw the vast majority expecting the Fed to continue to taper its monetary policy. At this week’s FOMC meeting Fed Chairman Ben Bernanke also hands over to Janet Yellen the reins of the U.S. central bank.

The Chinese Lunar New Year holiday is approaching, whereby the world’s largest nation and second-largest economy mostly shuts down for several days.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, durable goods orders, the S&P/Case-Shiller home price index, the consumer confidence index, and the Richmond Fed business survey.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is still a bit jittery about the emerging currency stresses seen recently, and there is a hefty slate of U.S. economic data out Tuesday.)

(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, on a corrective bounce after hitting a six-week low Monday. 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 Monday’s high of 1,791.70 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 1,775.00 and then at Monday’s low of 1,767.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are weaker early today and hit a five-week low overnight. 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 and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at 3,500.00 and then at 3,525.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,465.75 and then at 3,450.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are firmer in early U.S. trading on a short-covering bounce after hitting a six-week low Monday. Bulls have faded to suggest a major market top is in place. 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 neutral to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today on more profit taking after hitting a three-month high on Monday. The bulls still have some 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 the overnight high of 132 21/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132 even and then at 131 20/32. 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 more profit taking after hitting a two-month high last Friday. Bulls still have 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 to bearish early today. Shorter-term resistance lies at 125.00.0 and then at Monday’s high of 125.09.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.21.0 and then at the 124.16.0. 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 firmer early today on more short covering. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.845 and then at 81.000. Shorter-term support is seen at the overnight low of 80.475 and then at Monday’s low of 80.390. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are firmer early today. Bulls still have some upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at $97.00 and then at Monday’s high of $97.18. Look for sell stops just below technical support at the overnight low of $95.63 and then at Monday’s low of $95.21. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were steady to firmer overnight. There is not much new in the grains this week. U.S. corn, soybeans and wheat all need shots of fresh world export demand. Technically, soybean bulls and bears are on a level playing field. Corn and wheat market bears are in full command. The demand side of the equation for grains will continue to be a major market factor in the grain markets. South American corn and soybean growing weather is deemed mostly favorable and so far a non-issue for the markets.

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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