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Jim Wyckoff's Morning Report: Markets Firmer Overnight

03 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The European Central Bank is holding its monthly monetary policy meeting Thursday, including a press conference from ECB president Mario Draghi.

Most, but not all, do not expect the ECB to make a major move Thursday. However, Draghi’s comments at his press conference could very well give guidance on what the ECB will do in the coming weeks. The European Union’s producer price index dropped 0.2% in February and was down 1.7% year-on-year, it was reported Wednesday. 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 puts more pressure on the ECB to ease its monetary policy in order to jumpstart economic growth in the EU. Draghi is likely to address this week’s EU PPI number at his press conference.

The Markit data firm reported Thursday the EU’s composite purchasing managers index fell to 53.1 in March from 53.3 in February. A reading above 50.0 suggests expansion. However, the survey said businesses reduced their prices for the 24th month in a row.

In other overnight news the Chinese government announced a $24 billion stimulus plan in the form of railway improvements. Also, the HSBC China purchasing managers’ index rose to 51.9 in March from 51.0 in February. Asian equity markets were supported on the China stimulus and PMI news.

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 Thursday includes the weekly jobless claims report, the Challenger job cuts report, the international trade report, the global services PMI, and the U.S. services PMI.

Wyckoff’s Daily Risk Rating: 5.0 (The geopolitical front is quiet at present, from a market place perspective.)

(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 and hovering near Wednesday’s record high in early U.S. trading today. 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 record high of 1,886.25 and then at 1,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 1,876.25 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 3,655.75 and then at Wednesday’s low of 3,643.50. 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 and hovering not far below the record high. Buy stops likely reside just above technical resistance at the record high of 16,535 and then at 16,600. Sell stops likely reside just below technical support at Wednesday’s low of 16,487 and then at 16,420. 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 near steady early today. Bulls are fading 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 neutral to bearish early today. Shorter-term resistance lies at 132 10/32 and then at Wednesday’s high of 132 20/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 131 26/32 and then at 131 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

June U.S. T-Notes: Prices are slightly higher early today on tepid short covering after hitting a 10-week low overnight. 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 neutral to bearish early today. Shorter-term resistance lies at the overnight high of 123.00.0 and then at 123.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.26.5 and then at 122.20.0. 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 firmer in early trading on short covering. Bears still 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 this week’s high of 80.575 and then at 80.745. Shorter-term support is seen at the overnight low of 80.335 and then at this week’s low of 80.115. Wyckoff's Intra Day Market Rating: 5.5

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. In May Nymex crude, look for buy stops to reside just above resistance at the overnight high of $99.48 and then at $100.00. Look for sell stops just below technical support at this week’s low of $98.86 and then at $98.00. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were firmer in overnight trading, on corrective bounces from selling pressure Wednesday. Some profit taking from recent gains is featured in all the grains. In soybeans and wheat, the bulls need to show power late this week to avoid some chart damage being inflicted. Traders will closely examine this morning’s weekly USDA export sales report.

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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