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Jim Wyckoff's Morning Report: Market Awaits Employment Report

07 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Friday is a big day for the market place. The U.S. Labor Department’s employment report for January is out at 8:30 a.m. eastern time.

The monthly jobs report is always important, but this particular report is extra important. Reason: A recent spate of disappointing U.S. economic data, including the December jobs report, has called into question how much more the Fed will be able reduce its monthly bond-buying program, also called quantitative easing.

A weaker-than-expected non-farm jobs number on Friday would find a growing camp of market watchers who reckon the Fed would at least temporarily halt 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.

The major feature of the trading week is that 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 next week in some secondary currencies, as China is now back at work after its Lunar New Year holiday break.

Other U.S. economic data due for release Friday includes the consumer installment credit report.

Wyckoff’s Daily Risk Rating: 7.0 (The U.S. jobs report could produce higher price volatility in many markets in morning trading Friday.)

(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 more short covering and perceived bargain hunting. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bullish today. Today, shorter-term technical resistance comes in at 1,780.00 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 1,765.90 and then at 1,750.00. 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 more short covering and perceived bargain hunting. The shorter-term moving averages (4- 9-and 18-day) are still 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 to bullish early today. Shorter-term technical resistance is located at 3,525.00 and then at 3,545.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,487.25 and then at 3,475.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are firmer in early U.S. trading, on more short covering and perceived bargain hunting. Buy stops likely reside just above technical resistance at this week’s high of 15,640 and then at 15,700. Sell stops likely reside just below technical support at 15,549 and then at 15,500. 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 bullish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are slightly lower early today on more profit taking from recent gains. The bulls still have some near-term technical momentum but need to show fresh power soon to keep it. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 8/32 and then at Thursday’s high of 133 19/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 132 24/32 and then at 132 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

March U.S. T-Notes: Prices are weaker early today on more profit taking. 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 125.23.5 and then at Thursday’s high of 125.30.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.15.0 and then at 125.10.0. 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 slightly higher early today. Trading remains choppy. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 81.250 and then at Thursday’s high of 81.350. Shorter-term support is seen at the overnight low of 80.945 and then at this week’s low of 80.805. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are slightly lower early today. Bulls still have upside near-term technical momentum. In March Nymex crude, look for buy stops to reside just above resistance at the overnight high of $98.02 and then at this week’s high of $98.83. Look for sell stops just below technical support at the overnight low of $97.23 and then at $96.80. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed to mostly firmer overnight. Grain market bulls are having a good week, so far. The grain market bulls have gained upside near-term technical momentum to begin to suggest that market bottoms are in place for corn and wheat. Wheat has seen buying interest from concerns about winter kill in U.S. growing regions, following recent very cold weather. Traders are also awaiting 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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