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Jim Wyckoff's Morning Report: Further Anxiety in Market Place

14 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place is heading into the weekend with higher anxiety.

It’s a mostly “risk-off” day for traders and investors Friday. European and Asian stock markets were lower overnight due to two main worries: the Ukraine crisis and slowing China economic growth. U.S. stock indexes rebounded modestly Friday morning in electronic trading, following sharp losses suffered on Thursday.

The Russian troop occupation of Ukraine remains a major concern among traders and investors. Reports Thursday said more Russian troops were mobilizing near the Ukraine border with Russia. A referendum from Crimean citizens on secession is scheduled for Sunday, and that vote outcome result could escalate the crisis in the region. U.S. and European Union leaders are threatening to impose economic and diplomatic sanctions on Russia—likely to be announced next week. There has already been a heavy price paid by the Russian economy for its invasion of Ukraine. Russian stock and financial markets have taken a beating the past week.

U.S. Secretary of State John Kerry is set to meet with Russia’s foreign minister Friday, in an effort to scale down the Ukraine situation. Not much substantive is expected to come out of that meeting. Kerry this week said it’s likely that Russian President Vladimir Putin will annex the Crimea region.

Almost as worrisome as Russia is recent downbeat economic data coming out of China. This week it was reported China’s industrial output did not meet market expectations, although the 8.6%, year-on-year rise in the January and February period was still very strong by world standards. What the market place perceives is that the rate of economic growth in China is gradually slowing. Traders and investors are also concerned about China’s credit and financial system, given the recent bond default by a Chinese corporation—the first one ever.

Markets’ price action Monday morning could be volatile if the Russia/Ukraine crisis escalates during the weekend. With the U.S. stock markets already looking “toppy,” the China and Ukraine matters could be the fundamental news that is the excuse for U.S. equities to put in major tops.

U.S. economic data due for release Friday includes the producer price index and the University of Michigan consumer sentiment survey.

Wyckoff’s Daily Risk Rating: 8.0 (The Ukraine situation remains a significant geopolitical risk in the market place, while China’s economic and financial conditions are also a worry. The market place is heading into an uncertain weekend.)

(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. The bulls still have the overall near-term technical advantage, but are fading a bit. 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 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 1,850.00 and then at 1,860.00. 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: 5.0

Nasdaq index futures: Prices are slightly 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 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 3,654.00 and then at 3,675.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 3,636.25 and then at 3,625.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady in early U.S. trading. Buy stops likely reside just above technical resistance at 16,100 and then at 16,150. Sell stops likely reside just below technical support at 16,000 and then at 15,950. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today. Bulls have regained good upside technical momentum this week, on mostly safe-haven buying and heavy short covering. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 133 22/32 and then at the March high of 134 1/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 133 9/32 and then at 133 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

June U.S. T-Notes: Prices are firmer early today. Bulls have some upside momentum. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 124.26.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.17.5 and then at 124.10.0. 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 in early trading. Prices Thursday hit a contract low. 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 the overnight high of 79.830 and then at this week’s high of 80.060. Shorter-term support is seen at 79.590 and then at the contract low of 79.375. Wyckoff's Intra Day Market Rating: 3.5

NYMEX CRUDE OIL

April Nymex crude oil prices are firmer on more short covering after hitting a five-week low on Wednesday. The bears still 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 mixed overnight. The grain market bulls have the overall near-term technical advantage. 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. These fundamental factors traders are watching are tilting to the bullish camp.

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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