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Jim Wyckoff's Morning Report: Market Uncertainty Remains

05 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place presently perceives the situation regarding the Russian military incursion of Crimea and the civil unrest in Ukraine has de-escalated the past 48 hours and the worst of the crisis may be over, as far as markets’ price reactions.

Russian president Putin on Tuesday said he was not planning on using military force in the Ukraine, even though his additional troops are on the ground there. Putin has also halted his military exercises near the Ukrainian border and ordered troops there back to their bases.

The above developments have put risk appetite back into the market place. U.S. stock indexes rallied sharply Tuesday and are at or near their peaks of the major bull runs they are on. Safe-haven gold and U.S. Treasury markets have wilted a bit as the situation in Ukraine has at least temporarily stabilized.

However, the U.S. is still considering taking action on economic and diplomatic sanctions against Russia. Putin may have backed down a bit on worry that any sanctions would seriously damage the already wobbly Russian economy. The European Union has not been as aggressive as the U.S. on the sanctions front, as the EU needs energy from Russia.

It was reported Wednesday that Chinese officials say they want to keep the world’s second-largest economy on a 7.5% annual economic growth path for 2014. That rate is a bit higher than many expected and is a bullish underlying factor for the raw commodity sector. China is the world’s largest consumer of raw commodities.

In other overnight news, the Euro zone showed stronger economic strength to start 2014, according to the Markit purchasing managers index, which rose to 53.3 in February from 52.9 in January. This particular reading was the highest since June of 2011. Also, European Union retail sales data rose by 1.6% in January from December, which is the best month-on-month growth rate in over a dozen years. These reports fall into the camp of those not looking for any further European Central Bank monetary policy stimulus forthcoming. The ECB holds its monthly monetary policy meeting on Thursday.

U.S. economic data due for Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the ISM non-manufacturing report on business, the global services PMI, the Fed’s beige book, and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 6.0 (The Russian military invasion of Crimea and the Ukraine unrest have de-escalated a bit—for now.)

(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 today, and hovering near Tuesday’s record high. The bulls have the solid overall near-term technical advantage. 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 Tuesday’s record high of 1,874.50 and then at 1,885.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,850.00 and then at Tuesday’s low of 1,843.90. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher early today and hovering near the Tuesday’s 13.5-year 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Tuesday’s high of 3,723.25 and then at 3,735.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,700.00 and then at 3,685.00. 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 and hovering near a six-week high. Bulls have the overall near-term technical advantage. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,405 and then at 16,450. Sell stops likely reside just below technical support at Tuesday’s low of 16,320 and then at 16,300. 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: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are slightly lower early today on more profit taking after hitting an eight-month high Monday. Bulls still have the near-term technical advantage but have faded. 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 132 16/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 6/32 and then at 132 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

June U.S. T-Notes: Prices are lower early today on more profit taking. Bulls are fading. 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 124.13.0 and then at 126.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.04.5 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The June U.S. dollar index is near steady early today. Prices are in a five-week-old downtrend on the daily bar chart. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.415 and then at 80.500. Shorter-term support is seen at the overnight low of 80.280 and then at Tuesday’s low of 80.080. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

April Nymex crude oil prices are modestly lower early today on more profit taking after hitting a contract high on Monday. Bulls still have the overall near-term technical advantage but are fading a bit. A steep two-month-old uptrend is still in place on the daily bar chart. In April Nymex crude, look for buy stops to reside just above resistance at the overnight high of $103.53 and then at $104.00. Look for sell stops just below technical support at $102.50 and then at $102.00. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were mostly slightly lower overnight. The Ukraine/Russia crisis has likely seen the bullish grain markets implications play out—unless there is serious military conflict in the Black Sea region, which would impact grain exports there. The grain market bulls still have near-term technical momentum on their side, to suggest major market lows are in place and that prices can work sideways or sideways to higher the rest of this year. Focus will soon turn to the U.S. planting season and any potential planting delays due to cold weather in the central U.S.

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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