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Jim Wyckoff's Morning Report: Markets Mostly Firmer Overnight

06 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - World stock markets have stabilized from their recent sell offs, partly due to the strains on some emerging market currencies easing this week.

Don’t be surprised if the anxiety rises again in some secondary currencies once China comes back to work after its Lunar New Year holiday break.

The important data point for Thursday is the monthly monetary policy meeting of the European Central Bank, including a press conference by ECB president Mario Draghi. Ideas were mixed on what, if any, action the ECB would take following several weeks of mostly upbeat economic data coming out of the European Union. However, this week there has been a couple of downbeat economic reports coming out of the EU. And there are still concerns about the very low rate of inflation in the EU that has some ECB watchers calling for additional monetary stimulus measures from the central bank.

The Bank of England left its key interest rates unchanged at its latest meeting Thursday.

A 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.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job cuts report, preliminary productivity and costs, the U.S. trade deficit report, and the ICSC chain store sales 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 firmer in early U.S. trading, on short covering. Bears still have some 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 bullish today. Today, shorter-term technical resistance comes in at 1,760.00 and then at 1,770.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,744.00 and then at this week’s low of 1,732.20. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early today on short covering. Bears still have some 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 neutral early today. Shorter-term technical resistance is located at the overnight high of 3,469.25 and then at 3,475.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,447.75 and then at 3,425.00. 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 short covering. Bears still have some downside technical momentum. Buy stops likely reside just above technical resistance at 15,450 and then at 15,500. Sell stops likely reside just below technical support at 15,367 and then at 15,300. 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: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today on profit taking from recent gains. The bulls still have some upside near-term technical momentum but need to show fresh power soon. Shorter-term moving averages (4- 9- 18-day) are still 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 bearish early today. Shorter-term resistance lies at the overnight high of 133 17/32 and then at 134 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 5/32 and then at 133 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 profit taking. 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 bearish early today. Shorter-term resistance lies at the overnight high of 125.30.5 and then at 126.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.22.5 and then at 125.16.0. 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 higher early today. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Wednesday’s high of 81.345 and then at last week’s high of 81.440. Shorter-term support is seen at the overnight low of 81.125 and then at 81.000. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are higher early today and hovering near the recent high. Bulls have upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at last week’s high of $98.59 and then at $99.00. Look for sell stops just below technical support at $98.00 and then at the overnight low of $97.25. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed to mostly firmer overnight. Traders are awaiting Thursday morning’s weekly USDA export sales report. The grain market bulls are having a good week this week and 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 also 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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