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Jim Wyckoff's Morning Report: Euro at Two-month High

06 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the Euro currency rose to a nearly two-month high against the flagging U.S. dollar following some positive economic reports coming out of the European Union.

The Markit purchasing managers index (PMI) rose to 54.0 in April from 53.1 in March. A reading above 50.0 suggests expansion in the sector. Spain and Italy showed very upbeat PMI numbers. Meantime, EU retail sales rose 0.3% in the latest month. However, EU data once again showed businesses’ selling prices dropped for the 25th straight month. This month’s monetary policy meeting of the European Central Bank, on Thursday, will be closely monitored as the ECB is feeling pressure to add further stimulus measures due to worries about deflation. The OECD said Tuesday the ECB should cut its main interest rate to ward off deflationary price pressure. An ECB rate cut would be an underlying bullish factor for the gold market.

The Russia-Ukraine tensions are still high, although there were no major developments overnight. Gold and U.S. Treasuries have seen safe-haven buying amid the heightened Russia-Ukraine conflict. This matter is not going away soon and will likely see an escalation in tenions.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. trade report, the IDB/TIPP economic optimism index, and the ISM semiannual business report.

Wyckoff’s Daily Risk Rating: 7.0 (The Russia-Ukraine tensions are 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 higher in early U.S. trading. Bulls are in technical control as prices hover not far below the record high. However, there is stiff technical resistance just above present prices. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at last week’s high of 1,886.00 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 1,880.50 and then at 1,870.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are higher early today. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 3,605.50 and then at 3,613.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,595.00 and then at 3,575.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.

Dow futures: Prices are slightly higher in early U.S. trading. Prices are hovering just below the record high. Buy stops likely reside just above technical resistance at Monday’s high of 16,480 and then at 16,500. Sell stops likely reside just below technical support at 16,400 and then at 16,350. 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: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are slightly lower early today on profit taking after hitting a contract high just recently. Bulls still have the solid overall near-term technical advantage. 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 135 27/32 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 17/32 and then at 135 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

June U.S. T-Notes: Prices are slightly lower early today. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 124.20.5 and then at 124.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.14.0 and then at 124.10.0. 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 solidly lower in early trading and hit a new contract low. The bears have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 79.375 and then at 79.500. Shorter-term support is seen at the overnight contract low of 79.155 and then at 79.000. Wyckoff's Intra Day Market Rating: 3.5

NYMEX CRUDE OIL

June Nymex crude oil prices are firmer in early U.S. trading on short covering. In June Nymex crude, look for buy stops to reside just above resistance at $100.00 and then at Monday’s high of $100.44. Look for sell stops just below technical support at the overnight low of $99.32 and then at $99.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were lower in overnight trading, on a corrective pullback from Monday’s gains. Weekly crop progress reports showed about one-third of the U.S. corn crop planted, with soybean planting now under way, too. The USDA data showed the U.S. wheat crop continues to deteriorate. Technically, soybean bulls have faded badly. Corn bulls are hanging on to their near-term chart advantage and wheat bulls have upside momentum. Friday’s USDA supply and demand report is now in focus.

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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