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Jim Wyckoff's Morning Report: Critical Day for Markets

30 April 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Wednesday is an extra important trading day. Not only is important U.S. economic data released, it’s also the last trading day of the month, which makes it a critical day from a technical perspective.

Wednesday afternoon finds the results of the latest two-day FOMC meeting of the Federal Reserve. The FOMC is expected to continue to wind down its monthly bond-buying program, called tapering. Meantime, the gross domestic product and ADP national employment reports are also due out Wednesday. It’s setting up to be an active trading day in the markets.

In overnight news, inflation in the European Union picked up in April, which is a good thing, given the recent worries about deflation gripping the bloc. However, the rise was not as much as economists expected. EU consumer prices rose 0.7% year-on-year, up from the 0.5% rate reported for the same period in March. The data lands in the camp of monetary policy doves that want the European Central Bank to further stimulate its monetary policy.

The Russia-Ukraine crisis is still on the radar screen of the world market place. The matter has not de-escalated. This situation is likely to get worse before it gets any better. Gold and other safe-haven assets will likely at least see selling interest limited due to the instability in Ukraine.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the employment cost index, the Chicago ISM business survey, the weekly DOE energy stocks report and the U.S. Treasury’s quarterly refunding announcement.

As the calendar turns to May the old stock market adage comes to mind: “Sell in May and go away.” If this seasonal phenomenon holds true this year and U.S. stock indexes weaken in the coming months, such would be a bullish underlying factor for the raw commodity sector, including gold. Reason: Raw commodities are a competing asset class with equities. And recently, it’s the equities that have been the winner in the quest for investor monies.

Wyckoff’s Daily Risk Rating: 7.0 (The Russia-Ukraine tensions are still elevated.)

(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 lower in early U.S. trading on mild profit taking from recent gains. Bulls are still in technical control. 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 neutral early today. Today, shorter-term technical resistance comes in at last week’s high of 1,882.50 and then at the record high of 1,892.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,865.00 and then at 1,853.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are lower early today on profit taking from recent gains. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at Tuesday’s high of 3,570.00 and then at 3,590.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,546.50 and then at Tuesday’s low of 3,533.50. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are slightly lower in early U.S. trading today. Buy stops likely reside just above technical resistance at 16,500 and then at the record high of 16,555. 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 neutral early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower early today on more profit taking from recent gains. Bulls still have the overall near-term technical advantage but are now fading a bit and need to show fresh power soon. Shorter-term moving averages (4- 9- 18-day) are still 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 17/32 and then at this week’s high of 134 30/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 133 25/32 and then at 133 14/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

June U.S. T-Notes: Prices are lower early today. 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 124.02.0 and then at this week’s high of 124.06.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 123.22.0 and then at 123.16.0. 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 weaker again in early trading. The bears have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.020 and then at 80.065. Shorter-term support is seen at this week’s low of 79.615 and then at 79.500. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

June Nymex crude oil prices are lower in early U.S. trading and hit a three-week low overnight. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $100.76 and then at $101.00. Look for sell stops just below technical support at $100.00 and then at $99.00. Wyckoff's Intra-Day Market Rating: 4.0

GRAINS

Markets were mostly lower in overnight trading, on profit taking and a technical pullback from recent good gains. The corn market still sees support from planting delays in the U.S. Corn Belt. Soybean bulls have the solid overall technical advantage amid tight domestic stocks. Wheat bulls also have the chart advantage. A poor U.S. winter wheat crop is bullish for the wheat market, as evidenced by the early findings of the hard red winter wheat tour in Kansas this week. The Russia-Ukraine crisis is a bullish underlying factor for corn and wheat. For the next few months weather in the central U.S. will be a major market factor for the grains.

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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