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Wyckoff's Morning Report: Markets Mixed Overnight

04 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The feature in overnight trading was a stock market sell-off in Asia and Europe, led by Japan’s Nikkei stock index being down over 4%. Some very weak U.S. manufacturing data Monday pushed the U.S. stock indexes sharply lower, and world stock markets followed overnight.

U.S. stock indexes were stable and pausing Tuesday morning.

Traders and investors worldwide are still jittery over the situation with some emerging market currencies being in turmoil—although those troubled smaller currencies were generally on good behavior Tuesday. The past couple weeks have seen investor risk appetite markedly decrease, and that’s been bullish for gold and U.S. Treasuries, but bearish for the equities markets.

Market watchers are wondering more and more early this year if the very mature bull market runs in world equity markets have finally run out of gas. Indeed, the month of January was unkind to the U.S. stock index bulls. Also, the higher daily price volatility at higher price levels in the U.S. stock indexes early this year is a bearish technical warning signal of a topping process playing out.

The recent spate of disappointing U.S. economic data now puts even more importance on Friday’s monthly U.S. jobs report for January. The early forecasts are for the key non-farm payrolls figure of the employment report to come in at up around 190,000 in January.

The Chinese Lunar New Year holiday has China on holiday early this week. That is keeping Asian markets somewhat subdued.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, manufacturers’ shipments and orders, and the IDB/TIPP economic optimism index.

Wyckoff’s Daily Risk Rating: 6.5 (There is still some risk aversion in the market place with the emerging market currency and world stock market anxieties.)

(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 firmer in early U.S. trading, on short covering after hitting a 3.5-month low on Monday. Bears still have downside near-term technical momentum. 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 today. Today, shorter-term technical resistance comes in at the overnight high of 1,743.30 and then at 1,750.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 1,732.50 and then at 1,725.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are firmer early today on a corrective bounce. Bulls have faded badly 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 and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at 3,450.00 and then at 3,475.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 3,425.25 and then at the December low of 3,415.25. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are firmer in early U.S. trading, on a corrective bounce after hitting a 3.5-month low on Monday. Bears still have downside technical momentum. Buy stops likely reside just above technical resistance at 15,350 and then at 15,400. Sell stops likely reside just below technical support at Monday’s low of 15,292 and then at 15,250. 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: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are lower early today, on a corrective pullback after hitting a 7.5-month high on Monday. 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 Monday’s high of 135 3/32 and then at 135 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 134 10/32 even and then at 134 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 early today on some profit taking from recent strong gains that saw prices hit a three-month high on Monday. Bulls still have 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 Monday’s high of 126.16.0 and then at 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.06.5 and then at 125.00.0. 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. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.300 and then at last week’s high of 81.440. Shorter-term support is seen at the overnight low of 81.075 and then at 81.000. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are near steady 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 $97.50. Look for sell stops just below technical support at Monday’s low of $96.26 and then at $96.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. There is not much fresh fundamental news in the markets and traders are awaiting next week’s USDA supply and demand report. Technically, soybean bulls and bears are on a level playing field. Corn and wheat market bears remain 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. Importantly, the risk aversion presently pervading the market place is a bearish underlying factor for the grain 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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