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Jim Wyckoff's Morning Report: Markets Mixed Overnight

12 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place is still buzzing about US Federal Reserve Chair Janet Yellen’s inaugural testimony on monetary policy to the Congress Tuesday.

Traders and investors examined closely her remarks and prepared text. The market place’s “take-away” from Yellen’s comments Tuesday is that she appears to be following closely in the footsteps of former Fed chairman Ben Bernanke, which is not surprising and does favor the dovish monetary policy camp. Yellen’s remarks were deemed friendly for the gold market and other raw commodity markets, as well as the U.S. stock market.

In overnight news, there was upbeat economic data coming out of China, as its exports were reported up 10.6% in January, year-on-year. This was much higher than the 0.1% rise that was forecast. China imports were also reported up 10% in January, year-on-year—also well above market expectations. This news coming out of the world’s second-largest economy is a bullish underlying factor for the raw commodity sector, including the precious metals.

Risk appetite in the market place has ticked up a bit following news Tuesday the U.S. government said it will ostensibly raise its debt ceiling without a nasty fight among Democrats and Republicans, which had been the case in recent years.

The emerging currency markets have been quiet the past couple weeks, after a rocky start to the new year. Fed Chair Yellen’s perceived dovish monetary policy ideas are somewhat of a salve for the secondary currencies.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE energy stocks report and the monthly U.S. Treasury budget statement.

Wyckoff’s Daily Risk Rating: 5.0 (No major data points on tap Wednesday.)

(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 near steady in early U.S. trading and hovering near a three-week high. Bulls have quickly regained upside near-term technical momentum. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-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 Tuesday’s high of 1,819.30 and then at 1,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,800.00 and then at this week’s low of 1,786.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmerhigher early today and hovering near the recent multi-year high. Bulls have regained good upside near-term technical momentum. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is located at Tuesday’s high of 3,626.00 and then at the January high of 3,635.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,600.00 and then at Tuesday’s low of 3,578.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are slightly higher in early U.S. trading. Bulls have regained good upside near-term technical momentum. Buy stops likely reside just above technical resistance at Tuesday’s high of 15,970 and then at 16,000. Sell stops likely reside just below technical support at 15,900 and then at 15,850. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish 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. The bulls are fading but still have the slight overall near-term technical advantage. 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 132 29/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 132 12/32 and then at 132 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. Bulls are fading. 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 125.19.5 and then at 125.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 125.07.0 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 on short covering. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 81.000 and then at 81.100. Shorter-term support is seen at the overnight low of 80.570 and then at 80.500. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are higher early today and hit a six-week high overnight. Bulls have upside near-term technical momentum. A steep four-week-old uptrend is in place on the daily bar chart. In March Nymex crude, look for buy stops to reside just above resistance at the December high of $100.79 and then at $101.00. Look for sell stops just below technical support at $100.00 and then at $99.50. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed but mostly weaker overnight. Traders are focusing on demand for U.S. grains. There are still rumors that China will cancel previously booked U.S. soybean purchases, but no confirming news of such has surfaced this week. The grain market bulls still have some upside near-term technical momentum to suggest market bottoms are in place for corn and wheat. The raw commodity market sector is showing signs of a collective bottom being in place, and that’s a bullish underlying factor for the grains.

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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