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Jim Wyckoff's Morning Report: US Stock Market Hovering at Record High

06 June 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The U.S. stock markets are hovering at record or multi-year highs to end the trading week. Meantime, European stocks and government bonds have rallied late this week.

A new and aggressive European Central Bank monetary policy stimulus package announced Thursday and dovish corresponding remarks from ECB president Mario Draghi were deemed stock market and European bond market bullish. Worries about stagnant European Union economic growth and deflationary price pressures forced the hand of the central bank. The ECB move on Thursday has bolstered the notions of some in the market place that the U.S. Federal Reserve may be forced to back off its plan of “tapering” its quantitative easing. It seems incongruous in this age of integrated world economies and markets to have the European Union stimulating its monetary policy, while at the same time the Fed is reeling in its monetary easing.

But now the market place as it turns its attention to Friday’s U.S. employment report for May. What is arguably the most important U.S. economic report of the month will give fresh insight on the health of the U.S. economy and potential upcoming actions from the Federal Reserve. The key non-farm payrolls figure in the report is forecast to rise by 210,000. However, Wednesday’s ADP national employment report showed a jobs gain figure below 200,000, which could be a clue Friday’s jobs report from the Labor Department will be a miss to the downside on the non-farms number. A non-farm jobs miss on the downside would be bullish for gold, while a stronger jobs reading would likely be bearish for gold.

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 higher in early trading and hit another record high overnight. 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 at the record high of 1,934.25 and then at 1,940.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,925.00 and then at Thursday’s low of 1,913.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer early today and hit a 13-year high overnight. Bulls 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 3,784.00 and then at 3,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,775.00 and then at 3,750.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are higher in early U.S. trading and hit a new record high overnight. Bulls have the solid overall near-term technical advantage. Buy stops likely reside just above technical resistance at 16,900 and then at 16,950. Sell stops likely reside just below technical support at 16,850 and then at 16,800. 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 to bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer early today on short covering and bargain hunting following recent selling pressure. Bulls still 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 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 135 24/32 and then at 136 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 11/32 and then at 134 31/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

September U.S. T-Notes: Prices are firmer on short covering and bargain hunting. 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 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 124.23.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.16.0 and then at 124.10.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The September U.S. dollar index is slightly higher in early trading. Bulls have the slight overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 80.830 and then at 81.000. Shorter-term support is seen at the overnight low of 80.460 and then at 80.250. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

July Nymex crude oil prices are slightly 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 $103.00 and then at this week’s high of $103.69. Look for sell stops just below technical support at the overnight low of $102.32 and then at $102.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were firmer in overnight trading, on mostly short covering. It’s still 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. So far, and in the extended forecast for the Corn Belt, no threatening weather for the crops is in the cards. The next major inflection point for the grains could be the U.S. Fourth of July holiday timeframe, which history shows grain prices can reverse trends or accelerate them. Technically, soybean bulls have the near-term advantage. Wheat and corn bears have the near-term technical edge.

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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