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Jim Wyckoff's Morning Report: China's Economic Growth Slows

13 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news the Organization for Economic Cooperation and Development (OECD) reported China’s economic growth rate will continue to slow in the coming months, while other countries’ economies will see steady growth.

Meantime, China’s industrial output grew by 8.7% in April, year-on-year, but was below expectations. To repeat what I’ve said many times, China’s economic numbers (if one can believe them) are still the envy of the major world economies. I suspect the bigger worry is that China’s ballooning economy comes with its financial system that is untested during the boom times. Economic history shows that booming economies are followed by busts—and as they say, the bigger they are the harder they fall.

The closely watched German ZEW economic expectations index was released Tuesday and saw confidence decline in May for the fifth month in a row, at 33.1 versus 43.2 in April. The German Bundesbank on Tuesday threw its support behind a likely upcoming move by the European Central Bank to ease its monetary policy. The Bundesbank is very worried about price deflation in the European Union. That news helped to sink the Euro currency and in turn boost the U.S. dollar index.

The Russia-Ukraine situation has not changed much recently, as the market place views it. While tensions are still high in the region, traders and investors have become numb to the matter. Such is evident by rallying world stock markets, including U.S. indexes hitting all-time highs Monday. It will take a major new development in the situation to shake the market place out of its malaise regarding the Ukraine-Russia conflict—which is likely to occur at some point down the road.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the NFIB small business optimism index, import and export price indexes, retail sales, and manufacturing and trade inventories.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still elevated, but the market place is becoming numb to the matter now.)

(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 firmer and poked to a new record high in early U.S. trading. Bulls are in firm near-term technical control. 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 1,900.00 and then at 1,910.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,886.00 and then at 1,775.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are firmer and hit a five-week high early today. The bulls have the near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 3,625.00 and then at 3,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,600.00 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 firmer in early U.S. trading and hit a record high overnight. Buy stops likely reside just above technical resistance at 16,700 and then at 16,750. Sell stops likely reside just below technical support at Monday’s low of 16,600 and then at 16,540. 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 to bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 135 21/35 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 135 5/32 and then at 135 even. 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. Bulls have the 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 124.27.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.21.5 and then at 124.16.0. 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 higher in early trading and hit a six-week high. Bulls have good upside momentum to suggest a market bottom is in place. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.285 and then at 80.500. Shorter-term support is seen at the overnight low of 79.920 and then at Monday’s low of 79.840. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

June Nymex crude oil prices are firmer in early U.S. trading and hit a two-week high. Bulls have some upside momentum. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $101.44 and then at $102.00. Look for sell stops just below technical support at $101.00 and then at the overnight low of $100.36. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed in overnight trading. Monday’s USDA crop progress reports showed good corn planting progress last week. However, wet weather this week in the U.S. Corn Belt is supportive for corn futures. Soybean trading has turned choppy but the bulls still have the overall near-term technical advantage. Wheat bulls still have the chart advantage, and forecasts for freezing overnight temperatures in the U.S. Plains states later this week are bullish for wheat futures.

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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