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Jim Wyckoff's Morning Report: EU Debt Causes Concerns

20 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The feature in quieter overnight trading is increasing worries about the European Union countries that have the most serious debt problems—namely Italy and Spain.

Italian bond yields rose to a five-week high overnight, while Spanish, Portuguese and Irish bond yields also rose. No single fundamental factor is being blamed for the rise in bond yields and rise in worry. Recent weak economic data coming from the EU is certainly a contributor.

German producer prices fell 0.1% in April and were down 0.9% year-on-year, it was reported Tuesday. The readings were lower than expected and add yet more concern of deflationary price pressures gripping the European Union. The data is another clue that the European Central Bank will move to further ease its monetary policy in June.

Asian stock markets were mostly firmer Tuesday, with no major news coming out of the region.

The Russia-Ukraine territorial crisis has not gone away, but there has been no major, fresh news from the region in a couple weeks. The Ukraine holds a presidential election on Sunday. I would not be surprised to see that within the next week or so this situation flares up again to become a front-burner issue in the market place. Such would likely be a bullish development for U.S. Treasuries, the U.S. dollar and gold.

The World Gold Council reported Tuesday that demand for gold bars and coins dropped by 39% in the first quarter of this year, compared with the same time last year. India is the major reason for the drop, said the WGC, mainly due to government restrictions on gold imports.

U.S. economic data due for release Tuesday is light and includes the weekly Johnson Redbook and Goldman Sachs retail sales reports. Two Federal Reserve officials give speeches today—Philadelphia Fed president Plosser and New York Fed president Dudley. Traders are awaiting Wednesday afternoon’s release of the minutes from the latest Federal Reserve Open Market Committee (FOMC) meeting.

Wyckoff’s Daily Risk Rating: 6.0 (The Russia-Ukraine tensions are still somewhat elevated, even though no new developments have occurred the past couple weeks.)

(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 near steady in early trading. 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 neutral early today. Today, shorter-term technical resistance comes in 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 Monday’s low of 1,865.75 and then at last week’s low of 1,859.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly higher early today. 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 the May high of 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 3,580.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are slightly higher in early U.S. trading. Bulls still have the near-term technical advantage. Buy stops likely reside just above technical resistance at 16,500 and then at 16,550. Sell stops likely reside just below technical support at 16,450 and then at Monday’s low of 16,410. 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 to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are near steady early today. Bulls still 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 bearish early today. Shorter-term resistance lies at the overnight high of 137 3/32 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 25/32 and then at 136 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

June U.S. T-Notes: Prices are near steady 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 early today. Shorter-term resistance lies at the overnight high of 125.25.5 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.20.0 and then at 125.16.0. 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 firmer in early trading. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.170 and then at 80.285. Shorter-term support is seen at Monday’s low of 79.935 and then at 79.840. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

July Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have good upside momentum as prices hover near the contract high. In July Nymex crude, look for buy stops to reside just above resistance at Monday’s high of $102.49 and then at the April high of $103.11. Look for sell stops just below technical support at the overnight low of $102.00 and then at Monday’s low of $101.52. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were higher in overnight trading, with short covering featured in corn and wheat. Still, the corn and wheat markets have declined recently to suggest market tops are in place. Soybeans remain resilient. 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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