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Jim Wyckoff's Morning Report: Russia-Ukraine Dominant Market Theme

15 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The Russia-Ukraine crisis is the dominant market theme this week.

The latest development overnight saw the Ukrainian president order his troops to regain control of the cities in eastern Ukraine that had been taken over by pro-Russia rebels. Ukraine government officials have accused Russia of instigating and even arming the protesters. There is also uncertainty regarding how the U.S. will react to the latest developments in the region. This conflict will remain a major markets-moving factor for at least the rest of this week.

Surprisingly, the gold market is under strong selling pressure Tuesday despite the tensions in Ukraine being ratcheted up at least one notch overnight. Gold had recently rallied on safe-haven demand due to the geopolitical unrest. This week’s firmer U.S. dollar index can be explained as one factor putting downside price pressure on gold Tuesday, along with profit taking and a corrective pullback from the recent gains that saw gold prices hit a three-week high on Monday. The greenback got a further boost on Monday when better-than-expected U.S. retail sales data was released. Gold’s price action Tuesday is a reminder of the age-old saying: “Markets can and will do anything and everything to frustrate the largest number of traders.”

In other overnight news, the key German economic reading, the Zew economic expectations index, came in at 43.2 in April, down from 46.6 in March. The decline was more than what forecasters were expecting and mostly due to worries about the Ukraine-Russia confrontation. However, the Zew current conditions index rose to its highest level in three years in April, coming in at 59.5 versus 51.3 in March. Germany is the strongest economy in the European Union.

Traders and investors are awaiting key economic data from China on Wednesday, including its gross domestic product reading. China is the world’s largest consumer of raw commodities.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the consumer price index, the Empire State manufacturing survey, Treasury international capital data, and the NAHB housing market index.

Wyckoff’s Daily Risk Rating: 7.5 (The Russia-Ukraine tensions are squarely on the front burner of the market place.)

(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, on a corrective bounce after hitting a two-month low early Monday. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9- and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 1,832.00 and then at 1,840.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,821.75 and then at 1,810.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly lower early today. Prices Monday hit a nine-week low. Bears still have some downside near-term technical momentum. The shorter-term moving averages (4- 9-and 18-day) are 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 neutral early today. Shorter-term technical resistance is located at Monday’s high of 3,484.00 and then at 3,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,450.00 and then at Monday’s low of 3,429.75. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are slightly higher in early U.S. trading today. Prices Monday hit a two-month low. Buy stops likely reside just above technical resistance 16,150 and then at 16,200. Sell stops likely reside just below technical support at 16,050 and then at 16,000. Shorter-term moving averages are bearish early today, as the 4-day moving average is below the 9-day and 18-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are slightly lower early today on more mild profit taking that saw prices hit a contract high early Monday. Bulls still have the solid overall 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 the overnight high of 134 20/32 and then at 135 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 134 even and then at 133 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 lower early today on more profit taking after hitting a six-week high Monday. Notes bulls still have some upside technical momentum. 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 the overnight high of 124.19.0 and then at 124.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 124.08.0 and then at 124.00.0. 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 more short covering. The bears still have the overall near-term technical advantage, but the bulls are on the move this week. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 80.000 and then at 80.150. Shorter-term support is seen at overnight low of 79.810 and then at Monday’s low of 79.620. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

May Nymex crude oil prices are lower in early U.S. trading on profit taking after hitting a contract high Monday. Bulls still have the solid overall near-term technical advantage. In May Nymex crude, look for buy stops to reside just above resistance at the overnight high of $103.65 and then at $104.00. Look for sell stops just below technical support at the overnight low of $102.91 and then at $102.50. Wyckoff's Intra-Day Market Rating: 4.0

GRAINS

Markets were mixed in overnight trading. Weather in the central U.S. has been cold and wet the past few days, including some snow on the ground as U.S. corn planters wait to roll. Presently, corn planting is at about half the completion rate of normal. This is bullish for corn. The cold U.S. weather and the heightened Russia-Ukraine tensions are bullish for wheat. Technically, wheat bulls have now regained the slight technical edge. Corn and soybean bulls still have the firm near-term technical advantage.

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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