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Jim Wyckoff's Morning Report: Markets Mixed Overnight

02 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the European Union’s producer price index dropped 0.2% in February and was down 1.7% year-on-year.

The year-on-year decline was the largest since late 2009 and is yet another element adding to the deflation concerns in the EU. The PPI report will put more pressure on the European Central Bank to ease its monetary policy in order to jumpstart economic growth in the EU. The ECB holds its monthly monetary policy meeting on Thursday, including a press conference from ECB president Mario Draghi. Most do not expect the ECB to make a major move Thursday, but Draghi’s comments at his press conference could very well give guidance on what the ECB will do in the coming weeks.

Arguably the most important economic data point of the week and of the month is Friday’s March U.S. employment report from the Labor Department. The key non-farm payrolls number is expected to be up 200,000. Trading in many markets could be constrained ahead of that report.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the ISM New York report on business, manufacturers’ shipments and inventories and the weekly DOE energy stocks report.

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 slightly higher in early U.S. trading today and hit a new all-time 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- and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight record high of 1,883.50 and then at 1,890.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,870.00 and then at Tuesday’s low of 1,862.25. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are firmer early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is located at 3,675.00 and then at 3,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,550.25 and then at 3,625.00. 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 16,500 and then at the all-time high of 16,535. Sell stops likely reside just below technical support at Tuesday’s low of 16,420 and then at 16,400. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower again early today on more profit taking. Bulls still have the overall level near-term technical advantage, but are fading. 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 bearish early today. Shorter-term resistance lies at the overnight high of 132 20/32 and then at 133 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 132 10/32 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 weaker early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 123.13.5 and then at this week’s high of 123.17.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the March low of 123.02.5 and then at 123.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

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 bearish early today. The dollar index finds shorter-term technical resistance at 80.285 and then at 80.400. Shorter-term support is seen at the overnight low of 80.150 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 follow-through selling pressure from strong losses posted Tuesday. Bulls are fading quickly. In May Nymex crude, look for buy stops to reside just above resistance at $100.00 and then at $100.46. Look for sell stops just below technical support at $99.00 and then at $98.50. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed but mostly weaker overnight—corn and wheat weaker and soybeans firmer. Some profit taking from recent gains is featured. 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. Focus is on the U.S. planting season for corn and soybeans, the poor hard red winter wheat crop condition and on U.S. export demand.

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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