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Jim Wyckoff's Morning Report: Markets Slightly Lower Overnight

20 February 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Traders and investors are still buzzing about Wednesday afternoon’s FOMC minutes, in which the Federal Reserve’s voting members held the line on wanting to keep the Fed’s “tapering” process in place—despite some recent weaker-than-expected U.S. economic data.

The FOMC minutes were deemed just a bit more hawkish than expected, but did not have a major impact on the market place.

There was a downbeat manufacturing purchasing managers’ index coming out of China Thursday. The Markit preliminary manufacturing PMI came in at a seven-month low of 48.3 in February from 49.5 in January. A reading below 50.0 suggests contraction in the sector. This report adds to recent concerns about a slowing Chinese economy—the second-largest in the world and the world’s largest raw commodity consumer. Meantime, the European Union manufacturing and services PMI came in at 52.7 in February versus 52.9 in January. The China PMI data and the slightly more hawkish FOMC minutes worked to put some downside pressure on Asian and European stock markets Thursday.

Violence in Ukraine this week is getting major news coverage. There was a truce reported between the government and protesters late Wednesday, but gunfire was reported in Kiev Thursday. If that situation sees violence escalate, more risk aversion would enter the market place to more directly impact markets.

There is a heavy slate of U.S. economic data due for release Thursday, including the weekly jobless claims report, real earnings, the consumer price index, leading economic indicators, the flash manufacturing PMI, the Philadelphia Fed business outlook survey, and the weekly DOE energy stocks report.

Wyckoff’s Daily Risk Rating: 6.0 (The violence in Ukraine and a heavy slate of U.S. economic data due out Thursday have put some more risk into the market place.)

(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. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,829.00 and then at 1,840.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,817.60 and then at 1,810.00. 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. Bulls still have some 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 3,660.25 and then at 3,675.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,639.50 and then at 3,625.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are weaker in early U.S. trading. Buy stops likely reside just above technical resistance at 16,016 and then at 16,080. Sell stops likely reside just below technical support at 15,965 and then at 15,900. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above 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 firmer early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 133 15/32 and then at this week’s high of 133 29/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 27/32 and then at this week’s low of 132 21/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are slightly higher early today. 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 the overnight high of 126.02.0 and then at this week’s high of 126.09.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.21.0 and then at this week’s low of 125.16.5. 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 higher early today on short covering in a near-term bear market. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.405 and then at 80.500. Shorter-term support is seen at 80.220 and then at the overnight low of 80.070. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

April Nymex crude oil prices are slightly lower early today on mild profit taking, and hovering near Wednesday’s new contract high. Bulls still have near-term technical momentum. A steep six-week-old uptrend is in place on the daily bar chart. In April Nymex crude, look for buy stops to reside just above resistance at Wednesday’s contract high of $103.29 and then at $104.00. Look for sell stops just below technical support at the overnight low of $102.45 and then at $102.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were slightly lower overnight, on corrective pullbacks from recent good gains. Grain market bulls are enjoying success recently. Soybeans are supported on reports of crop problems in South American soybean regions. Fundamentally, improving demand for U.S. grains has boosted the futures markets recently. Technically, the grain market bulls still have upside near-term technical momentum to suggest market bottoms are in place for corn and wheat. USDA’s annual Ag Outlook Conference begins today, and some market-sensitive information will likely come out of that meeting.

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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