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Jim Wyckoff's Morning Report: Markets Mixed Overnight

01 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, China’s manufacturing purchasing managers’ index (PMI) rose for the first time in six months, coming in at 50.3 in March versus 50.2 in February.

However, the similar Markit-HSBC survey showed the China PMI coming in at 48.0 in March from 48.5 in February. These two reports ostensibly cancelled each other out.

In the European Union, the Markit manufacturing PMI came in at 53.0 in March from 53.2 in February. While EU manufacturing activity has expanded for nine months running, the worrisome part of the Markit report was that some manufacturers were starting to drop their prices for their goods. The European Central Bank is worried about deflation setting in for the EU and could act soon to provide further monetary policy stimulus. The monthly ECB monetary policy meeting is Thursday.

The European and Asian stock markets received upside support Tuesday, following the lead of the U.S., after perceived dovish comments from Federal Reserve Chair Janet Yellen on Monday. Yellen spoke at a gathering in Chicago and said the U.S. central bank needs to keep interest rates extremely low to prop up the still very shaky U.S. jobs market.

Traders and investors are awaiting a heavy slate of U.S. economic data due out this week, capped by the jobs report on Friday. U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. manufacturing PMI, construction spending, the IBD/TIPP economic optimism index, the global services PMI, domestic auto sales, and the ISM manufacturing report.

Russia’s annexation of the Crimea region of Ukraine remains a geopolitical tension, but not quite a front-burner markets issue at this time.

Wyckoff’s Daily Risk Rating: 5.0 (The Ukraine situation has for the moment de-escalated.)

(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 June e-mini futures: Prices are firmer in early U.S. trading today and pushing back up toward the record high scored in early March. The bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are nuetral early today. The 4-day moving average is above the 9- and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the record high of 1,880.50 and then at 1,890.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,862.25 and then at Monday’s low of 1,855.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today. The shorter-term moving averages (4- 9-and 18-day) are still bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is located at Monday’s high of 3,610.00 and then at 3,625.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,581.75 and then at Monday’s low of 3,576.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are higher in early U.S. trading and hit a three-week high overnight. Buy stops likely reside just above technical resistance at 16,450 and then at the March high of 16,490. Sell stops likely reside just below technical support at 16,400 and then at 16,373. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower again early today on more profit taking after hitting a contract high last week. Bulls still have the overall level near-term technical advantage. 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 133 even and then at the overnight high of 133 9/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 132 16/32 and then at 132 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

June U.S. T-Notes: Prices are weaker early today. Bears have the overall near-term technical advantage. 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 bearish early today. Shorter-term resistance lies at the overnight high of 123.17.5 and then at 123.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.10.0 and then at the March low of 123.02.5. 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 slightly lower in early trading. Bears have the overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 80.400 and then at Monday’s high of 80.575. Shorter-term support is seen at Monday’s low of 80.115 and then at 80.000. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

May Nymex crude oil prices are weaker in early U.S. trading, on a profit-taking pullback after hitting a three-week high last Friday. Bulls still have some upside momentum. In May Nymex crude, look for buy stops to reside just above resistance at the overnight high of $101.57 and then at last week’s high of $102.24. Look for sell stops just below technical support at $101.00 and then at $100.46. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed but mostly firmer overnight—corn and soybeans higher and wheat lower. The markets are digesting Monday’s USDA report, which was bullish for corn the most, but soybeans also rallied. Both May corn and soybean futures closed at bullish monthly and quarterly high closes Monday.

The corn and soybean bulls still have the solid overall near-term technical advantage. Wheat bulls are fading and need to show fresh power soon.

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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