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Jim Wyckoff's Morning Report: Markets Await Federal Reserve Open Market Committee Briefing

18 June 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The big economic data point of the week and maybe the month occurs Wednesday: The U.S. Federal Reserve Open Market Committee meeting that began 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. 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. Look for many markets to gyrate at least a bit following the FOMC statement and possibly during Yellen’s press conference.

The civil war in Iraq remains a major market factor at mid-week and is prompting some keener risk aversion among many traders and investors. Reports overnight said violence in Iraq is still flaring and that the ISIS rebels have taken partial control over Iraq’s largest oil refinery. Crude oil prices are at multi-month highs on worries about Iraqi crude oil exports being reduced, and on concerns the violence in Iraq could spread to other Arab nations.

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

The above geopolitical flashpoints will continue to be very closely monitored for new developments. Both situations are likely to worsen before they become better. The gold market, crude oil, U.S. Treasuries and the U.S. dollar should all at least see limited selling interest as these two developments play out.

In other news, the latest German government auction of its 10-year bond fetched a yield of 1.39%, which is the lowest rate in over a year. Demand for the German bund was termed weak, however.

The World Gold Council said it will meet in July to discuss revamping the London gold fix, which has been closely watched for over a century.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC meeting results.

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 near steady 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 1,935.50 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 Tuesday’s low of 1,923.75 and then at last week’s low of 1,917.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

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 Tuesday’s high of 3,784.75 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 Tuesday’s low of 3,762.00 and then at this week’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 slightly higher in early U.S. trading. Bulls still have the overall near-term technical advantage. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,740 and then at 16,800. Sell stops likely reside just below technical support at 16,700 and then at this week’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 early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are slightly higher 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 neutral early today. Shorter-term resistance lies at the overnight high of 135 11/32 and then at 135 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134 30/32 and then at 134 18/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

September U.S. T-Notes: Prices are higher in early trading today but did hit a five-week low overnight. Bulls and bears are on a level near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 124.02.5 and then at 124.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.25.0 and then at 123.20.0. 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 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 the overnight high of 80.735 and then at this week’s high of 80.815. Shorter-term support is seen at this week’s 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 firmer and hovering not far below last week’s contract high in early U.S. trading. 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 $107.00 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: 5.5

GRAINS

Markets were firmer in overnight trading on short covering following recent selling pressure. Grain market bears are still dominating, overall. 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. Remember, however, that gain markets can “turn on a dime” when summertime weather forecasts change. Stay tuned.

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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