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Jim Wyckoff's Morning Report: Markets Weaker Overnight

05 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - While traders and investors are still concerned about the situation regarding some emerging market currencies being in turmoil, most of those troubled smaller currencies have stabilized this week.

This helped the Japanese stock market make a recovery Wednesday. The Chinese Lunar New Year holiday has China on holiday this week. That is keeping other Asian markets somewhat subdued.

In overnight news, the European Union issued a retail sales report for December that was down 1.6% on the month and down 1.0% on the year. The Euro Zone purchasing managers index (PMI) for January came in at 52.9 in January versus 52.1 in December. This data comes just ahead of the monthly meeting on monetary policy by the European Central Bank on Thursday. Ideas are mixed regarding any significant move by the ECB to further ease its monetary policy at Thursday’s gathering.

The key data point in the U.S. on Wednesday is the ADP national employment report. The recent spate of disappointing U.S. economic data has put even more importance on Friday’s monthly U.S. jobs report for January. A weaker-than-expected jobs report on Friday would call into question how much more the Fed would be able reduce its monthly bond-buying program, also called quantitative easing. Late last year the U.S. central bank announced its “tapering” program, whereby the Fed is slowly scaling back its monthly bond purchases. The early forecasts are for the non-farm payrolls figure of the Labor Department’s employment report to come in at up around 190,000 in January.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the U.S. Treasury’s quarterly refunding announcement, the ISM non-manufacturing report on business, the global services PMI, and the weekly DOE energy stocks report.

Wyckoff’s Daily Risk Rating: 6.0 (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 lower in early U.S. trading. 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 to bearish today. Today, shorter-term technical resistance comes in at Tuesday’s high of 1,753.00 and then at 1,760.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’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: 4.5

Nasdaq index futures: Prices are slightly lower early today. Bears 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 and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at Tuesday’s high of 3,473.75 and then at 3,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’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: 4.5.

Dow futures: Prices are slightly lower in early U.S. trading. Bears have downside technical momentum. Buy stops likely reside just above technical resistance at Tuesday’s high of 15,405 and then at 15,450. Sell stops likely reside just below technical support at this week’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 early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly higher 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 the overnight high of 134 13/32 and then at 135 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 134 even and then at this week’s low of 133 14/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are firmer early today. 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 this week’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 126.02.5 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly lower early today. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.280 and then at last week’s high of 81.440. Shorter-term support is seen at this week’s low of 81.075 and then at 81.000. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

March Nymex crude oil prices are firmer early today. Bulls have some upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at the overnight high of $98.26 and then at last week’s high of $98.59. Look for sell stops just below technical support at $97.00 and then at this week’s low of $96.26. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mostly weaker overnight on corrective pullbacks from Tuesday’s good gains. The grain market bulls this week have gained some upside near-term technical momentum to begin to suggest that market bottoms are in place for corn and wheat. Wheat is seeing buying interest from concerns about winter kill in U.S. growing regions, following recent very cold weather. Traders are awaiting next Monday’s USDA supply and demand report. Some other raw commodity futures markets are also seeing price strength and bottoming action, which is also a clue the raw commodity sector, in general, could see better times just ahead.

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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