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Jim Wyckoff's Morning Report: Downbeat Market Report from China

13 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - There was another downbeat economic report coming out of China Thursday.

China’s industrial output rose by 8.6%, year-on-year, in the January and February period. That’s lower than the 9.5% rise that was expected and down from a rise of 9.7% in December. While the above numbers are considered by the market place to be a “miss,” most other industrialized nations would love to have economic readings like that. What the market place is noticing is that the rate of economic growth in China is gradually easing. Traders and investors are also a bit concerned about China’s credit and financial system, given the recent bond default by a Chinese corporation—the first one ever. Gold has seen safe-haven buying due to the uncertainty of the aforementioned matters in China.

The U.S. dollar index fell to a 4.5-month low overnight, which also is an underlying bullish factor for the precious metals.

The Russian troop occupation of Ukraine is still a concern among traders and investors. U.S. and European Union leaders are threatening to impose economic and diplomatic sanctions on Russia. Meantime, Russia said it will do the same to the U.S. and EU. A referendum from Crimean citizens on secession is scheduled for Sunday, and that could be the next flashpoint in the region. It would not be surprising to see keener risk-aversion in the market place on Friday, heading into an uncertain weekend for Ukraine. The Russian occupation of Crimea has also been a bullish factor for the gold market.

U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export price indexes, manufacturing and trade inventories, and retail sales.

Wyckoff’s Daily Risk Rating: 7.0 (The Ukraine situation remains a significant geopolitical risk in the market place, while China’s economic and financial conditions are also a worry.)

(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 firmer in early U.S. trading today. The bulls still have the 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 the overnight high of 1,874.50 and then at this week’s high of 1,881.80. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,867.00 and then at this week’s low of 1,854.20. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-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 the overnight high of 3,722.00 and then at last week’s high of 3,737.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,700.00 and then at 3,675.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are firmer in early U.S. trading. Buy stops likely reside just above technical resistance at 16,400 and then at this week’s high of 16,450. Sell stops likely reside just below technical support at 16,300 and then at this week’s low of 16,260. Shorter-term moving averages are still 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 to bearish 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. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at this week’s high of 132 12/32 and then at 132 21/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131 29/32 and then at 131 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

June U.S. T-Notes: Prices are slightly lower early today. 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 the overnight high of 124.04.0 and then at this week’s high of 124.07.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.29.0 and then at Wednesday’s low of 123.22.0. 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 solidly lower in early trading. Prices hit a fresh contract low overnight. Prices are in a six-week-old downtrend on the daily bar chart. Bears are in firm technical command. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 79.590 and then at the overnight high of 79.745. Shorter-term support is seen at the overnight contract low of 79.375 and then at 79.250. Wyckoff's Intra Day Market Rating: 3.0

NYMEX CRUDE OIL

April Nymex crude oil prices are firmer on short covering after hitting a five-week low on Wednesday. The bears have the overall near-term technical advantage. In April Nymex crude, look for buy stops to reside just above resistance at $99.00 and then at Wednesday’s high of $99.60. Look for sell stops just below technical support at $98.00 and then at this week’s low of $97.55. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mostly firmer overnight. The grain market bulls have the overall near-term technical advantage, but the soybean bulls have faded and need to show fresh power soon. Wheat is now leading the corn market, which is not common. Focus is on these things, at present: export demand for U.S. grains, the Ukraine unrest, poor U.S. HRW wheat conditions, and the upcoming 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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