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Jim Wyckoff's Morning Report: Markets Weaker Overnight

19 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - European stock markets were weaker Monday, led by weakness in the Italian stock market.

Spanish and Italian bond yields are again on the rise, which suggests renewed strains within the periphery countries of the European Union. These developments follow recent weak economic data coming out of the EU. The renewed worries about the overall health of the European Union’s collective economy have been part of the reason the U.S. Treasury market yields have dropped recently. The Euro currency has also slumped recently, while the U.S. dollar index has rallied.

Asian equity markets were also weaker on some more downbeat economic news coming out of China. The real estate market in China is showing more signs of weakness, weekend reports out of China said.

The European Central bank said Monday it is coordinating with Switzerland and Sweden on gold transactions but none have plans to sell significant amounts of gold. The coordination is in place to keep the gold market stable during any transactions that do occur. The ECB said gold remains “an important element of global monetary reserves.” The World Gold Council said Monday this news only underscores the importance of gold as an investment asset class.

Reports overnight also said a government election result in India last Friday is a positive for the gold market as the more pro-business election winner could move to ease the current import restrictions on gold.

There is no major U.S. economic data due for release Monday.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still somewhat elevated and U.S. Treasuries are rallying on safe-haven buying.)

(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 weaker on more profit taking after prices hit a record high last week. Bulls are still in overall near-term technical control. 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 bearish early today. Today, shorter-term technical resistance comes in the overnight high of 1,877.50 and then at 1,888.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 1,859.00 and then at the May low of 1,854.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are lower early today on more profit taking. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 3,589.50 and then at 3,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,550.00 and then at last week’s low of 3,539.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are lower in early U.S. trading on profit taking after hitting a record high last week. Buy stops likely reside just above technical resistance at 16,465 and then at 16,500. Sell stops likely reside just below technical support at 16,400 and then at 16,365. 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 early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer higher early today and hovering near last week’s contract high. 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 early today. Shorter-term resistance lies at the overnight high of 137 24/32 and then at the contract high of 138 4/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 137 11/32 and then at 137 even. 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 and hovering near a six-month high. 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 early today. Shorter-term resistance lies at the overnight high of 125.28.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.22.0 and then at 125.20.0. 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 weaker in early trading. Bulls still have some upside momentum to suggest prices can continue to trend higher in the near term. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.110 and then at 80.285. Shorter-term support is seen at last week’s low of 79.840 and then at 79.750. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

July Nymex crude oil prices are higher and hit a four-week high in early U.S. trading. Bulls have upside momentum. In July Nymex crude, look for buy stops to reside just above resistance at $102.50 and then at the April high of $103.11. Look for sell stops just below technical support at $102.00 and then at the overnight low of $101.52. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mostly weaker in overnight trading. There was good corn and soybean planting progress made during a mostly dry weekend in the U.S. Corn Belt. The corn and wheat markets have declined recently to suggest market tops are in place. Soybeans have been resilient, but I cannot see the grains moving in divergent paths. Thus, I suspect soybeans could succumb to selling pressure in the near term. Weather in the U.S. Corn Belt remains a major market factor. Warmer temperatures this week and scattered rains are in the forecast, which favors the bearish camp.

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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