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Jim Wyckoff's Morning Report: Markets Firmer Overnight

18 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the Bank of Japan made a de facto monetary policy stimulus move Tuesday following weak gross domestic product data released Monday.

The BOJ offered incentives to Japanese banks to lend more money. The Nikkei stock index rallied sharply and the yen weakened on the BOJ move. Japanese government officials continue to work to get out of a deflationary cycle that has been in place for many years.

Meantime, China’s central bank used repurchase agreements to drain liquidity from its financial system—the second straight week of such a move. The Chinese central bank is trying to curb bank lending a bit after a rise in lending in January.

In the European Union, the closely watched German ZEW economic expectations survey unexpectedly fell to 55.7 in February from 61.7 in January.

A feature in the market place in recent weeks has been a rally in the gold market. Gold prices are in a six-week-old uptrend on the daily bar chart and on Tuesday hit a 3.5-month high of $1,332.40 an ounce, basis the April Comex gold futures contract. It is my bias that the raw commodity sector has hit a cycle low and the sector will see better times just ahead.

U.S. economic data due for release Tuesday includes the Empire State manufacturing survey, Treasury international capital data, and the NAHB housing market index.

Wyckoff’s Daily Risk Rating: 5.0 (The world market place remains calm this week.)

(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 weaker in early U.S. trading. Bulls still have some upside near-term technical momentum as prices hover near the all-time high. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 1,840.00 and then at the December all-time high of 1,846.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,825.00 and then at 1,815.00. 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 and did poke to a 13-year high overnight. Bulls still have upside near-term technical momentum. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at the overnight high of 3,672.50 and then at 3,685.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,650.00 and then at 3,638.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are slightly higher in early U.S. trading. Bulls have upside near-term technical momentum. Buy stops likely reside just above technical resistance at 16,200 and then at 16,250. Sell stops likely reside just below technical support at 16,100 and then at 15,965. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day and 18-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 firmer early today. The bulls have faded recently. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at 133 14/32 and then at 133 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 21/32 and then at 132 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are higher early today. 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 neutral to bullish early today. Shorter-term resistance lies at the overnight high of 125.27.5 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.16.5 and then at 125.08.0. 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, on tepid short covering after hitting a seven-week low on Monday. Bears still have downside near-term technical momentum. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.265 and then at 80.360. Shorter-term support is seen at the overnight low of 80.140 and then at Monday’s low of 79.990. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

March Nymex crude oil prices are higher early today and hovering near last week’s 3.5-month high. Bulls have near-term technical momentum. A six-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 last week’s high of $101.38 and then at $102.00. Look for sell stops just below technical support at the overnight low of $100.23 and then at $100.00. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were firmer overnight, with soybeans leading the way on talk of some crop problems in South American soybean regions. The grain market bulls have 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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