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Jim Wyckoff's Morning Report: Markets Awaiting Economic Data from the Trading Session

04 June 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The U.S. gets some significant economic data out during the trading session, which could move the markets. The ADP national employment report and the Fed’s beige book are highlights.

Other data includes the weekly MBA mortgage applications survey, revised productivity and costs, the U.S. services PMI, the ISM non-manufacturing report, the global services PMI, and the weekly DOE liquid energy stocks report.

In overnight news, the European Union’s business activity slowed down in May. The Markit composite purchasing managers’ index for the Euro zone came in at 53.5 versus 54.0 in April. Also, EU gross domestic product for the first quarter was reported at an unrevised increase of 0.9%, year-on-year. Euro zone producer prices fell 0.1% in May from April and were down 1.2% year-on-year. These figures only increase concerns about deflationary price pressures gripping the European Union.

Thursday’s highly anticipated monthly monetary policy meeting of the European Central Bank is widely believed to see the bank announcing fresh monetary policy stimulus measures. Many believe the ECB refinancing rate will be reduced by around 10 or 15 basis points as well as a reduction in the deposit rate to just below zero, for a slightly negative return.

The big U.S. data point of a busy data week is Friday’s Labor Department employment situation report for May. The early forecast is for non-farm payrolls to have increased 215,000 in the report.

Wyckoff’s Daily Risk Rating: 5.5 (The Russia-Ukraine crisis has not escalated and the rest of the world is quieter regarding geopolitics.)

(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.

U.S. STOCK INDEXES

S&P 500 September e-mini futures: Prices are slightly lower in early trading and hovering near this week’s record high. Bulls are still 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 bearish early today. Today, shorter-term technical resistance comes in at the record high of 1,916.75 and then at 1,925.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,900.00 and then at 1,889.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker early today on profit taking and are hovering near a three-month high. Bulls still have the solid overall 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 3,731.00 and then at the March high of 3,740.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,721.75 and then at this week’s low of 3,710.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are slightly lower in early U.S. trading on profit taking after hitting a record high Monday. Bulls still have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,723 and then at the record high of 16,745. Sell stops likely reside just below technical support at this week’s low of 16,675 and then at 16,640. Shorter-term moving averages are bullish early today, as the 4-day moving average is above 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: 4.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are slightly lower early today on more profit taking. Bulls still have the overall near-term technical advantage but are fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 135 20/32 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at 135 even and then at 134 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

September U.S. T-Notes: Prices are slightly lower on more profit taking. Bulls still have the overall near-term technical advantage but are fading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 124.16.0 and then at the overnight high of 124.19.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.10.5 and then at 124.08.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The September U.S. dollar index is near steady in early trading, on mild profit taking but still hovering near a two-month high. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 80.830 and then at 81.000. Shorter-term support is seen at this week’s low of 80.565 and then at 80.480. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

July Nymex crude oil prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. In July Nymex crude, look for buy stops to reside just above resistance at $104.00 and then at the contract high of $104.50. Look for sell stops just below technical support at $103.00 and then at the overnight low of $102.69. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were firmer in overnight trading, on short covering and a corrective bounce from recent selling pressure. The U.S. corn and soybean crops are mostly planted now, so the recent rainy weather is bearish. “Rain makes grain.” It’s my bias that June will be a mostly bearish month for the grains—unless the rain in the Corn Belt diminishes and the temperatures rise, which is not a big stretch. Technically, soybean bulls have the solid near-term advantage. Wheat and corn bears have the near-term technical edge. Focus in the grains will remain in weather patterns in the U.S. midsection.

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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