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Jim Wyckoff's Morning Report: Markets Solidly Higher

07 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Overnight trade in European and Asian markets was more subdued ahead of the big economic data point of the week: the U.S. employment report on Friday morning.

The forecast is for the key non-farm payrolls figure of the jobs data to come in at up 150,000 in February. Any reading that deviates significantly from that forecast is likely to move the markets. In recent weeks, U.S. economic data has mostly missed the pre-report forecasts and have been on the weak side of those forecasts. There are many in the market place that think Friday’s jobs report will miss the forecast non-farms number to the downside.

A feature in the market place late this week is the surge in the Euro currency against the U.S. dollar. The Euro is at a 2.5 year high versus the greenback. The U.S. dollar index is at a 4.5-month low. These currency moves have been a bullish underlying factor for gold and other raw commodity markets that are priced in U.S. dollars.

The situation in Ukraine has for now changed from a serious geopolitical matter to more of a regional issue of lesser significance—from a market place perspective. However, there is a move among Crimea citizens to have a referendum to have their region annexed by Russia. The Ukraine parliament, the European Union and the U.S. say they will not recognize any a vote on the matter. A vote on the issue is scheduled for March 16, and that could be the next flashpoint in the region.

Reports overnight said a major Chinese solar equipment maker defaulted on a corporate bond payment—the first time such has occurred from a Chinese company. Most would have thought the Chinese government would have stepped in to rescue the ailing domestic business. Others suggest the Chinese government is working on weeding out ailing businesses and employing more capitalist principles, including letting weak businesses fail. The corporate bond default has raised concerns about the overall health of the Chinese economy.

In other overnight news, German industrial output rose 0.8% in January, month-on-month, it was reported Friday. That figure was slightly higher than market expectations. The European Union’s largest economy is off to a good start in 2014.

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

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine situation has de-escalated—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 slightly higher in early U.S. trading today and hovering near Thursday’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 Thursday’s record high of 1,880.80 and then at 1,890.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 1,871.40 and then at 1,860.00. 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 Thursday’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 Thursday’s high of 3,737.25 and then at 3,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,718.25 and then at 3,700.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

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 this week’s high of 16,435 and then at 16,500. Sell stops likely reside just below technical support at Thursday’s low of 16,392 and then at 16,330. 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 firmer early today on short covering. Bulls have faded amid the increase in investor risk appetite this week. Bulls 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 neutral to bearish early today. Shorter-term resistance lies at the overnight high of 132 even and then at Thursday’s high of 132 13/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131 21/32 and then at 131 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

June U.S. T-Notes: Prices are firmer early today on short covering. The bulls have faded this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 124.08.0 and then at 126.14.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.00.0 and then at this week’s low of 123.28.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The June U.S. dollar index is lower early today and hit a fresh contract low overnight. Prices are in a five-week-old downtrend on the daily bar chart. Bears are in firm command. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 79.835 and then at 80.000. Shorter-term support is seen at the overnight contract low of 79.590 and then at 79.750. Wyckoff's Intra Day Market Rating: 3.0

NYMEX CRUDE OIL

April Nymex crude oil prices are modestly higher early today on a corrective bounce after hitting a three-week low on Thursday. Bulls still have the overall near-term technical advantage but have faded to suggest a market top is now in place. A two-month-old uptrend on the daily bar chart has been negated. In April Nymex crude, look for buy stops to reside just above resistance at $102.50 and then at $103.00. Look for sell stops just below technical support at the overnight low of $101.57 and then at $101.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were solidly higher overnight. Strong export demand for U.S. grains recently is a bullish factor for these markets. A slumping U.S. dollar index this week is also bullish for the grains. Traders are awaiting Monday’s monthly USDA supply and demand report. The grain market bulls have near-term technical momentum on their side, to suggest prices can work sideways or sideways to higher. 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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