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Jim Wyckoff's Morning Report: Eastern Tensions Affect Marketplace

16 June 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It’s a modest “risk-off” day in the market place Monday, as the situation in Iraq deteriorated during the weekend.

The Sunni rebel group trying to gain control of Iraq claims it has executed 1,700 Iraqi Shiite government soldiers. Earlier reports said the rebels have captured Iraqi government military hardware (supplied by the U.S.) and hundreds of millions of U.S. dollars in cash from the Iraqi central bank. Reports also said the U.S. may be reaching out to Iran for help on dealing with this growing crisis.

And the Russia-Ukraine tensions are still running high as Russia reportedly has cut the natural gas supply to Ukraine and said it will supply natural gas to Ukraine only if paid for in advance.

Crude oil prices are at or near multi-month highs, and gold and U.S. Treasuries are rallying on the more unsettled geopolitical front, while world stock markets have seen some selling pressure.

The big economic data point of the week is likely to be the U.S. Federal Reserve Open Market Committee meeting that begins Tuesday and ends Wednesday afternoon, including a press briefing following the meeting by Fed Chair Janet Yellen. Most market watchers expect the FOMC to continue to taper its monthly bond-buying program, also called quantitative easing.

U.S. economic data due for release Monday includes the Empire State manufacturing survey, Treasury international capital data, industrial production and capacity utilization, and the NAHB housing market index.

Wyckoff’s Daily Risk Rating: 7.0 (Violence and civil war in Iraq has the world market place increasingly concerned.)

(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 September e-mini futures: Prices are weaker in early trading. Bulls still have the overall near-term technical advantage. 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 at the overnight high of 1,928.25 and then at 1,940.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 1,917.50 and then at the June low of 1,906.50. 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. Bulls still have the overall near-term technical advantage. 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 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 3,768.00 and then at 3,780.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,754.25 and then at 3,737.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. Buy stops likely reside just above technical resistance at 16,700 and then at 16,750. Sell stops likely reside just below technical support at 16,600 and then at 16,550. 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 bearish early today. Wyckoff's Intra-Day Market Rating: 4.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are firmer and hit a two-week high 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 136 11/32 and then at 136 19/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 135 21/32 and then at 135 5/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

September U.S. T-Notes: Prices are firmer in early trading today. Bulls have regained the near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral to bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 124.16.5 and then at last week’s high of 124.20.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.06.5 and then at 124.00.0. 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 lower in early trading. Bulls still 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 the overnight high of 80.815 and then at last week’s high of 81.010. Shorter-term support is seen at the overnight low of 80.610 and then at 80.500. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

July Nymex crude oil prices are firmer and hovering near last week’s contract high in early U.S. trading. Iraq violence is boosting crude. Bulls have the solid overall near-term technical advantage. Prices are in a five-month-old uptrend on the daily bar chart. In July Nymex crude, look for buy stops to reside just above resistance at the contract high of $107.68 and then at $108.00. Look for sell stops just below technical support at the $106.50 and then at $106.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mostly firmer in overnight trading, on short covering and bargain hunting following recent selling pressure. Weather in the U.S. Corn Belt remains the dominant theme in the grain markets, and at mid-June it remains good for growing, which is bearish for the corn and soybean prices. Technically, soybean bears have the slight near-term advantage. Wheat and corn bears have the solid near-term technical edge. I suspect these recent downturns in the grains will be a buying opportunity for those looking to profit from a weather-market-scare bounce that is likely to occur yet this summer.

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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