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Jim Wyckoff's Morning Report: Markets Quiet on Lack of Economic Data

09 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Markets were quieter in overnight trading, as no major economic news came out of Europe or Asia Friday.

A feature in the market place last this week has been in the currency markets. The U.S. dollar index on Thursday morning hit a multi-month low, but then made a strong rebound by the end of the day and scored a technically bullish “key reversal” up, including follow-through buying on Friday, to begin to suggest the index has bottomed out. The Euro currency, meantime, saw prices hit a multi-month high on Thursday, and then post a bearish key reversal down, to suggest a market top is in place for the common currency. European Central Bank president Mario Draghi helped to precipitate the currency moves Thursday when he intimated he was not happy with the rising value of the Euro on the world currency markets, and said the ECB could act soon to stimulate European Union monetary policy. These developments combined are a potentially bearish underlying factor for the gold market and other raw commodity markets. Most major commodity markets worldwide are priced in U.S. dollars. When the value of the greenback rises on the foreign exchange market, it makes those raw commodities priced in dollars more expensive to purchase with other world currencies.

The Russia-Ukraine situation could see tensions escalate this weekend as an independence referendum is scheduled to take place in a region of eastern Ukraine. This matter is still a potential geopolitical powder keg that the market place cannot ignore. Gold and U.S. Treasuries have seen some safe-haven buying in recent weeks, amid the heightened Russia-Ukraine conflict.

U.S. economic data due for release Friday is light and includes the monthly wholesale trade 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 lower in early U.S. trading. Bulls are still in near-term 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 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 Thursday’s low of 1,865.00 and then at this week’s low of 1,854.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 3,550.00 and then at 3,565.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 3,524.25 and then at this week’s low of 3,497.00. 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 on profit taking after hitting a record high on Thursday. Buy stops likely reside just above technical resistance at Thursday’s record high of 16,565 and then at 16,600. Sell stops likely reside just below technical support at Thursday’s low of 16,455 and then at 16,400. Shorter-term moving averages are neutral early today, as the 4-day moving average is below 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 firmer early today on mild safe-haven buying. Bulls 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 contract high of 136 22/32 and then at 137 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 29/32 and then at this week’s low of 135 17/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

June U.S. T-Notes: Prices are near steady 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 to bullish early today. Shorter-term resistance lies at this week’s high of 125.05.0 and then at the March high of 125.06.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.00.0 and then at Thursday’s low of 124.24.5. 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 solidly higher in early trading. Bulls have quickly gained upside momentum as a bullish key reversal up has occurred, to suggest a market bottom is in place. The bears still have the overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at 79.750 and then at the May high of 79.935. Shorter-term support is seen at the overnight low of 79.460 and then at 79.375. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

June Nymex crude oil prices are firmer in early U.S. trading. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $101.18 and then at $101.50. Look for sell stops just below technical support at $100.00 and then at $99.78. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed in quieter overnight trading. Friday’s USDA supply and demand report will be the feature of the day in the grain markets. Weather forecasts for the U.S. Corn Belt are also in focus. Good corn and soybean planting progress has been made in the Corn Belt this week. But rain is forecast over much of the region for the weekend. The corn and wheat market bulls are having a good week. The soybean bulls had faded but put in a good showing Thursday.

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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