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Jim Wyckoff's Morning Report: Markets Weaker Overnight

09 July 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - A feature on Tuesday was the sell-off in the U.S. stock market that has many wondering if the long-anticipated downside correction is finally at hand for the major and mature bull market run in equities.

Early technical clues the U.S. stock indexes have peaked would be two solid down-days in a row, or a bearish weekly low close on a Friday. But at present the stock market bulls still possess the solid overall near-term technical advantage amid longer-term price uptrends on the charts. When the air does finally come out of the highly inflated stock market balloon—which it will—the other competing asset classes will likely benefit, including raw commodities.

Overall, it’s been a quieter trading affair in many markets this week, amid a lack of major world economic news released so far. The focal point for the market place this week is the FOMC meeting minutes from the Federal Reserve that are due out Wednesday afternoon. Market prices have been very sensitive to Fed data releases in recent years. Traders and investors will look at this latest Fed data for early clues on just when the Fed might decide to raise its interest rates.

Traders and investors are keeping a closer eye on the Middle East, as Israel has launched a military offensive on the Gaza strip. Gold may be seeing some safe-haven demand due to the latest military action by Israel. This situation is a potential powder-keg that could further incite unrest in other parts of the Middle East.

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 minutes.

Wyckoff’s Daily Risk Rating: 6.0 (The two major geopolitical events of recent weeks and months—the Ukraine-Russia conflict and the Iraqi civil war—have not seen any major developments recently. However, the Israeli offensive in Gaza is a concern to the market place at present.)

(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 solid overall near-term technical advantage. Good selling pressure again today would begin to do just a bit of near-term technical damage, however. 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 Tuesday’s high of 1,970.50 and then at last week’s record high of 1,978.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 1,952.75 and then at 1,937.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady early today following Tuesday’s sell off. Bulls still have the overall near-term technical advantage. However, another down day today would give the bears technical momentum. Shorter-term moving averages (4- 9-and 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 3,875.00 and then at 3,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,850.00 and then at Tuesday’s low of 3,843.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady 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 16,875 and then at 16,900. Sell stops likely reside just below technical support at Tuesday’s low of 16,800 and then at 16,750. Shorter-term moving averages are still bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is below 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 near steady early today. Bulls are having a good week and have regained the 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 Tuesday’s high of 136 25/32 and then at 137 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 13/32 and then at 136 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

September U.S. T-Notes: Prices are near steady in early trading. Bulls have regained the 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 Tuesday’s high of 124.28.0 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.20.0 and then at 124.16.0. 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 regained some upside near-term technical momentum. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 80.405 and then at 80.500. Shorter-term support is seen at the overnight low of 80.140 and then at 80.000. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

August Nymex crude oil prices are slightly lower in early U.S. trading. Bulls have faded to suggest a near-term market top is in place. In August Nymex crude, look for buy stops to reside just above resistance at Tuesday’s high of $104.20 and then at $104.50. Look for sell stops just below technical support at Tuesday’s low of $103.01 and then at $102.50. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were lower in overnight trading. Bears are in firm technical command. However, all the grains are well oversold on a short-term technical basis and due for corrective bounces very soon. This week’s trading action will be extra important. If grain futures prices can rebound well off their weekly lows by this Friday, it would be a clue that the markets have put in their lows. Weather in the Corn Belt remains nearly ideal for growing crops. Extended weather forecasts presently still see no excessively dry or hot weather on the horizon. Corn and soybean crops have high ratings from USDA, to suggest record yields. Traders are looking ahead to Friday’s USDA supply and demand report.

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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