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Jim Wyckoff's Morning Report: Markets Firmer Overnight

10 July 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - World stock markets are under selling pressure Thursday due to several new developments: Weak economic data from the European Union, including Italy’s industrial output dropping 1.2% in May and Euro zone house prices declining 0.3% in the first quarter.

Also, trade data from China did not meet expectations. China’s exports grew by 7.2%, year-on-year, in June, which was below market expectations of a 10% rise. And there are reports that a major bank or banks in Portugal are in trouble. All of the above have boosted the gold market, U.S. Treasuries and the U.S. dollar index, amid risk aversion that is keener in the market place Thursday.

Given the recent weak economic data coming out of the European Union, traders will be closely watching European bond yields, for clues on European investor confidence. The European Union sovereign debt crisis is not that far removed from the market place.

Traders and investors are also keeping a closer eye on the Middle East, as Israel this week launched a military offensive on the Gaza strip. 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 Thursday includes the weekly jobless claims report, monthly wholesale trade inventories and ICSC chain store sales trends.

The market place has pretty much digested Wednesday afternoon’s FOMC minutes from June. The FOMC said the Fed is on track to end its monthly bond-buying program (quantitative easing) in October. The FOMC minutes offered no strong clues on specifically when the U.S. central bank will start to raise interest rates. However, the market place does not expect a rate hike this year, and that notion was reinforced by Wednesday’s latest FOMC minutes.

In other overnight news, reports said the Indian government did not relax gold import tax restrictions in its annual budget. Many reckoned the new Indian government would lower the tax rate, which would have been bullish for the gold market.

Wyckoff’s Daily Risk Rating: 7.0 (There is keener risk aversion in the market place Thursday morning, due to the aforementioned developments.)

(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 solidly lower in early trading. Bulls are fading. 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 1,960.00 and then at the overnight high of 1,968.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,947.50 and then at 1,936.25. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.0

Nasdaq index futures: Prices are solidly lower early today as the bulls are fading. 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 bearish early today. Shorter-term technical resistance is seen at 3,875.00 and then at the overnight high of 3,887.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 3,843.00 and then at 3,825.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are solidly lower in early U.S. trading. Bulls are fading a bit. Buy stops likely reside just above technical resistance at 16,800 and then at 16,850. Sell stops likely reside just below technical support at 16,750 and then at 16,700. 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: 4.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher and hit a six-week high early today, on safe-haven demand. Bulls are having a very good week and have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 137 23/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the 137 even and then at the overnight low of 136 21/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.5

September U.S. T-Notes: Prices are higher in early trading and hit a six-week high overnight. Bulls have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 125.15.0 and then at 125.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.00.0 and then at the overnight low of 124.29.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.5

U.S. DOLLAR INDEX

The September U.S. dollar index is higher in early trading on short covering and safe-haven buying. Slow stochastics for the dollar index are neutral 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 80.020 and then at last week’s low of 79.770. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

August Nymex crude oil prices are lower and hit a five-week low 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 $102.50 and then at $103.00. Look for sell stops just below technical support at the overnight low of $101.55 and then at $101.00. Wyckoff's Intra-Day Market Rating: 4.5

GRAINS

Markets were higher in overnight trading on a short-covering bounce from recent strong selling pressure. Bears are still in firm technical command. However, if grain futures prices can rebound well off their weekly lows by the closes 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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