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Jim Wyckoff's Morning Report: Big Day for Economic Data

15 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It’s a big day for U.S. economic data Thursday: weekly jobless claims, the consumer price index, real earnings, the Empire State manufacturing survey, industrial production and capacity utilization, the Philadelphia Fed business survey, and Treasury capital flow data.

It’s likely the batch of economic data will have at least some impact on the market place.

In overnight news, the European Union’s gross domestic product rose a paltry 0.2% in the first quarter, year-on-year. That was half of the 0.4% growth rate expected for the bloc. Eurostat also reported consumer prices rose 0.7% in April, year-on year—well below the European Central Bank’s target of just under 2% annual inflation. The Thursday data prompted more dovish talk from the ECB.

Have you looked at a daily bar chart for the U.S. Dollar Index and Euro currency lately? Big-time price reversals have occurred the past week. The greenback has rallied sharply to a five-week high, while the Euro has slumped to a four-week low. A major factor prompting these moves is the growing likelihood the European Central Bank will ease monetary policy at its regular monthly meeting in early June. The Russia-Ukraine crisis has also prompted some flight-to-safety buying of the U.S. dollar, while at the same time producing weakness in the Euro currency due to Europe’s heavier reliance on Russian energy imports. The upside reversal of the U.S. dollar index is also a bearish underlying factor for the raw commodity sector, as most major world currencies are priced in dollars. If you trade markets or even stocks, you are missing out on a key element of trading if you do not pay close attention to currency movements.

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 more mild profit taking after prices hit a record high Tuesday. Bulls are still in firm near-term technical control. 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 bearish early today. Today, shorter-term technical resistance comes in the overnight high of 1,888.50 and then at the record high of 1,898.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,874.00 and then at 1,862.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly higher 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 early today. Shorter-term technical resistance is seen at Wednesday’s high of 3,614.50 and then at this week’s high of 3,625.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,593.00 and then at 3,583.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are modestly lower in early U.S. trading on more profit taking after hitting a record high Tuesday. Buy stops likely reside just above technical resistance at 16,600 and then at 16,650. Sell stops likely reside just below technical support at 16,500 and then at 16,450. 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: 4.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are slightly higher early today after hitting a contract high Wednesday. 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. 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 contract high of 137 9/32 and then at 137 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 23/32 and then at 136 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

June U.S. T-Notes: Prices are near steady after hitting a nearly six-month high Wednesday. 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 125.23.5 and then at Wednesday’s high of 125.26.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.15.5 and then at 125.10.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The June U.S. dollar index is higher in early trading and hit another six-week high overnight. Bulls have upside momentum to suggest prices can continue to trend higher in the near term. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.365 and then at 80.500. Shorter-term support is seen at the overnight low of 80.075 and then at 80.000. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

June Nymex crude oil prices are weaker in early U.S. trading on some profit taking from recent good gains. Bulls still have some upside momentum. In June Nymex crude, look for buy stops to reside just above resistance at the overnight high of $102.16 and then at this week’s high of $102.65. Look for sell stops just below technical support at the overnight low of $101.74 and then at $101.00. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were mixed in overnight trading. Wet, cool 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 been choppy but the bulls have the overall near-term technical advantage. Wheat bulls still have the slight chart advantage, but are fading quickly. Corn bulls have faded badly to suggest a near-term market top is in place. Traders will closely examine this morning’s weekly USDA export sales 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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