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Jim Wyckoff's Morning Report: Market Awaits Janet Yellen Testimony on US Economy

07 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The highlight in the U.S. Wednesday will be Fed Chair Janet Yellen’s testimony on the U.S. economy and monetary policy to the U.S. Congress. The market place will closely scrutinize Yellen’s remarks.

In overnight news, the HSBC purchasing managers’ index (PMI) report for China’s services sector came in at 51.4 in April from 51.9 in March. This data did not have much of an impact on markets as it was in line with forecasts.

The next big economic event for the world market places comes with the European Central Bank monthly monetary policy meeting on Thursday. There is growing pressure on the ECB to implement further monetary policy stimulus measures, amid worries about price deflation in the European Union. The Euro currency is at a multi-week high against the U.S. dollar, and the strength of the common currency is also a concern to many European officials and another reason to EU interest rates.

The Russia-Ukraine tensions are still high, although there have been no major developments at mid-week. 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 tensions. This is a bullish underlying factor for the gold market.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, preliminary productivity and costs, the global services PMI, the weekly DOE liquid energy stock report, and consumer installment credit.

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 near steady in early U.S. trading. Bulls are still 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 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 to bearish early today. Today, shorter-term technical resistance comes in at 1,880.50 and then at last week’s high of 1,886.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,860.50 and then at 1,850.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly higher early today. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 3,575.00 and then at 3,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,542.00 and then at 3,525.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer in early U.S. trading. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,415 and then at 16,450. Sell stops likely reside just below technical support at 16,350 and then at this week’s low of 16,310. Shorter-term moving averages are still 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 to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are near steady early today. 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 neutral early today. Shorter-term resistance lies at the overnight high of 136 11/32 and then at the contract high of 136 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s 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 higher 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 124.26.5 and then at last week’s high of 124.29.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.20.0 and then at this week’s low of 124.14.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The June U.S. dollar index is slightly higher in early trading and seeing tepid short covering in a bear market after prices Tuesday hit a 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 79.250 and then at 79.375. Shorter-term support is seen at the contract low of 79.090 and then at 79.000. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

June Nymex crude oil prices are higher in early U.S. trading on short covering. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $100.59 and then at $101.00. Look for sell stops just below technical support at $100.00 and then at Tuesday’s low of $99.32. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed in overnight trading. The corn and wheat market bulls are having a good week, but the soysoybean bulls have faded. Focus is now on Friday’s USDA supply and demand report. Trading could be more subdued in the grains ahead of Friday’s government 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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