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Jim Wyckoff's Morning Report: Keener Risk Aversion May Creep into the Market Place

23 May 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It would not be surprising to see some keener risk aversion creep into the market place as trading session progresses Friday. It’s a long, three-day holiday weekend in the U.S and U.K. The European Union sees parliamentary election results during the weekend.

There is concern in the EU about anti-EU candidates making a strong showing, which in turn has helped to push EU periphery countries’ bond yields higher recently. And the Russia-Ukraine territorial crisis, while presently on a low simmer, could see the heat turned up this weekend. The Ukraine holds a presidential election on Sunday. I would not want to be short gold, the U.S. Treasuries or the U.S. dollar heading into this extra uncertain weekend.

In overnight news, the German Ifo business confidence index missed market expectations, which helped to push the Euro currency still lower. The Ifo index for May came in at 110.4 versus 111.2 in April. Germany is by far the European Union’s largest economy. This report adds still more weight to notions the European Central Bank will move to further ease its monetary policy at its regular meeting in early June.

Credit rating agencies Moody’s and Standard & Poors have raised their ratings on the sovereign debt of Spain and Greece. The EU debt markets showed little reaction, with yields still elevated due to higher concern regarding the economic health of the bloc.

U.S. economic data due for release Friday is light and includes new residential sales.

Wyckoff’s Daily Risk Rating: 7.0 (It’s an extra uncertain weekend approaching, as mentioned above.)

(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.

US Stock Indexes

S&P 500 June e-mini futures: Prices are slightly higher in early trading. Bulls are in solid overall 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 to bullish early today. Today, shorter-term technical resistance comes in Thursday’s high of 1,894.00 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 Thursday’s low of 1,882.75 and then at this week’s low of 1,864.75. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher today. Bulls have the overall near-term technical advantage and are having a good week. 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 Thursday’s high of 3,660.00 and then at the April high of 3,669.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,649.00 and then at Thursday’s low of 3,633.50. 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 have the overall near-term technical advantage. Buy stops likely reside just above technical resistance at Thursday’s high of 16,550 and then at 16,600. Sell stops likely reside just below technical support at 16,500 and then at Thursday’s low of 16,470. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day and 18-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: 5.5

US 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 137 even and then at Wednesday’s high of 137 12/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 15/32 and then at this week’s low of 136 6/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

June U.S. T-Notes: Prices are firmer early today. Bulls have the 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 bearish early today. Shorter-term resistance lies at the overnight high of 125.24.0 and then at Thursday’s high of 125.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 125.18.0 and then at 125.12.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

US Dollar Index

The June U.S. dollar index is slightly higher and hit a six-week high in early trading. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.490 and then at the April high of 80.770. Shorter-term support is seen at the overnight low of 80.285 and then at Thursday’s low of 80.125. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

July Nymex crude oil prices are slightly higher in early U.S. trading. Prices Wednesday hit a contract high. Bulls still have upside momentum. In July Nymex crude, look for buy stops to reside just above resistance at the contract high of $104.29 and then at $105.00. Look for sell stops just below technical support at Thursday’s low of $103.55 and then at $103.00. Wyckoff's Intra-Day Market Rating: 5.5

Grains

Markets were higher in overnight trading. Soybean bulls are on a charge this week. Wheat and corn are seeing short covering late this week. The bull move in soybeans will at least limit selling interest in corn and wheat markets. It’s a long holiday weekend, which means come Tuesday morning the grain markets could be extra active.

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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