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Jim Wyckoff's Morning Report: Markets Mixed Overnight

14 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, European Union industrial production fell in 0.3% in March from February, and was down 0.1% year-on-year.

Germany’s consumer price index fell 0.2% in April, from March, and was up 1.3% year-on-year. France’s consumer price index was unchanged in April from March and up 0.7% year-on-year. These figures are further cause for concern about deflation in the EU. In another sign that the market place believes the European Central Bank will further ease its monetary policy soon—to ward off the threat of deflation--a German treasury note offering Wednesday fetched the lowest yield since last July. Many now reckon the ECB will announce a new monetary stimulus plan at its meeting in early June.

In other news, China’s central bank this week is urging local banks to step up their mortgage lending to first-time home buyers, for fear of China’s property sector falling into a deeper slump.

The Russia-Ukraine situation has not changed much recently, as the market place views it. While tensions are still elevated in the region, traders and investors have become lackadaisical on the matter. 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 sooner rather than later.

Reports overnight said the London silver fix will end for good on August 14, after more than 100 years of existence. Three banks that had participated in the fixing pulled out, prompting the termination of the silver fix.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index, and the weekly DOE energy stocks report.

The Dow and S&P stock indexes have touched new record highs this week. The stock market remains the asset class which is at the forefront of traders’ and investors’ minds, and that which is pulling away money from other competing asset classes, such as raw commodities and real estate. The very mature bull run in the U.S. stock market will not go on forever. Once the money starts to come out of the presently tautly inflated stock market balloon, the other asset classes will stand to benefit.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still elevated but the market place has become numb to the matter as no fresh, major developments have occurred.)

(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 on mild profit taking after prices hit a record high Tuesday. 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 neutral 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 1,880.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly lower on profit taking after hitting a five-week high Tuesday. 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 the overnight high of 3,614.50 and then at Tuesday’s high of 3,625.00. 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: 5.0.

Dow futures: Prices are slightly lower in early U.S. trading on mild profit taking after hitting a record high Tuesday. 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 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: 5.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are solidly higher early today and hit a new contract high overnight. Bulls have the solid 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 to bullish early today. Shorter-term resistance lies at the overnight contract high of 136 23/35 and then at 137 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 136 even and then at the overnight low of 135 28/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.5

June U.S. T-Notes: Prices are higher and have hit a nearly six-month high early today. Bulls have the solid overall near-term technical advantage. 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 the overnight high of 125.14.5 and then at 125.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.01.0 and then at 124.24.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The June U.S. dollar index is lower in early trading and seeing a corrective pullback from solid gains posted just recently. Bulls still have upside momentum to suggest a market bottom is in place. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.185 and then at Tuesday’s high of 80.285. Shorter-term support is seen at 80.000 and then at Tuesday’s low of 79.920. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

June Nymex crude oil prices are firmer in early U.S. trading and hit another two-week high. Bulls have upside momentum. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $102.18 and then at $102.50. Look for sell stops just below technical support at the overnight low of $101.83 and then at $101.00. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mixed in overnight trading. Wet weather this week in the U.S. Corn Belt is supportive for corn and soybean futures, as it’s preventing planting of both crops. Soybean trading has turned choppy but the bulls 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. Corn bulls still have the near-term technical advantage but are presently struggling to keep an uptrend line in place on the daily bar chart.

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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