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Jim Wyckoff's Morning Report: Iraq Civil War Remains Main Concern

17 June 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The civil war in Iraq remains on the front burner of the market place Tuesday.

The situation there has not improved early this week, so there is still some keener risk aversion among many traders and investors. And the Russia-Ukraine tensions are still running high as Russia has cut the natural gas supply to Ukraine and said it will supply natural gas to Ukraine only if paid for in advance. These two geopolitical flashpoints will continue to be very closely monitored for new developments. Both situations are likely to become worse before they become better.

Crude oil prices are at or near multi-month highs, while gold and U.S. Treasuries are also supported on the more unsettled geopolitical front. World stock markets have seen some selling pressure in the wake of the rising geopolitical tensions. It would not surprise me to see this new geopolitical risk be one factor that helps to put in major tops in the world stock markets.

The big economic data point of the week is the U.S. Federal Reserve Open Market Committee meeting that begins Tuesday morning 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. As usual, the FOMC statement and Yellen’s comments at her press conference will be parsed for clues on future action coming from the FOMC.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the consumer price index, new residential construction, and the FOMC meeting begins.

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 slightly higher 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 neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 1,935.00 and then at the record high of 1,947.25. 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: 5.5

Nasdaq index futures: Prices are firmer early today. Bulls 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 neutral early today. Shorter-term technical resistance is seen at 3,790.00 and then at last week’s high of 3,805.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,775.00 and then at Monday’s low of 3,754.25. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading a bit. Buy stops likely reside just above technical resistance at 16,750 and then at 16,800. Sell stops likely reside just below technical support at 16,700 and then at Monday’s low of 16,655. 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

September U.S. T-Bonds: Prices are slightly lower early today. 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 136 4/32 and then at Monday’s high of 136 11/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s 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: 4.5

September U.S. T-Notes: Prices are slightly lower in early trading today. Bulls have the slight 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 neutral early today. Shorter-term resistance lies at the overnight high of 124.12.5 and then at this week’s high of 124.16.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 124.06.0 and then at 124.00.0. 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 slightly higher in early trading. Bulls still have the slight overall near-term technical advantage but need to show fresh power soon to keep it. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 80.815 and then at last week’s high of 81.010. Shorter-term support is seen at the overnight low of 80.485 and then at the June low of 80.375. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

July Nymex crude oil prices are weaker but hovering not far below last week’s contract high in early U.S. trading. Profit taking is featured. Bulls still 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 overnight high of $106.84 and then at the contract high of $107.68. Look for sell stops just below technical support at the $106.00 and then at $105.50. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were mostly weaker in overnight trading. The very good growing weather in the U.S. Corn Belt and more of the same in the extended forecast has the grain market bears very comfortable at present. Weekly crop progress reports out Monday evening showed very good corn and soybean crop conditions, also. Remember, however, that gain markets can “turn on a dime” when summertime weather forecasts change.

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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