Jim Wyckoff's Morning Report: Markets Weaker Overnight15 July 2014
GLOBAL - A feature in the market place Monday was the tumble in gold prices. Gold bulls need to recover very quickly to avoid near-term chart damage.
Price action Tuesday and Wednesday will be extra important for the gold market. A rebound in prices would suggest gold can work to maintain its recent uptrend.
Good follow-through selling pressure would suggest the near-term price uptrend is finished and that prices could work sideways to lower in the coming weeks.
One ominous clue for gold and the rest of the raw commodity sector is the recent sharp downturn in the Goldman Sachs Commodity Index (GSCI). Gold held up well during last week’s shellacking in the general raw commodity sector, but the pummeling appeared to catch up with the yellow metal Monday.
The lack of fresh concerns about the geopolitical front have led to better risk appetite in the market place early this week. However, four situations remain simmering on low heat on the back burner of the market place: the European Union sovereign debt crisis, the Iraqi civil war, the latest flare-up between Israel and Hamas, and the Russia-Ukraine tensions. Any one, or more, of these conflicts could quickly move to the front burner and quickly sap investor risk appetite.
The highlight of the trading week is likely to be testimony on U.S. monetary policy from Federal Reserve Chair Janet Yellen before the U.S. Congress on Tuesday and Wednesday. The worry in the market place is that Yellen’s comments may sound a more hawkish tone than in her previous remarks.
U.S. corporate earnings reports will also be featured this week. So far, major companies’ earnings have been upbeat.
In overnight news there was yet another downbeat economic report coming out of the European Union. The German ZEW economic expectations index came in at 27.1 in July versus 29.8 in June. The forecast was for a reading of 28.0. On Monday the International Monetary Fund (IMF) urged the European Central Bank to implement quantitative easing of its monetary policy, to help spur economic growth and to ward of deflationary price pressures.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, import and export prices, retail sales, the Empire State manufacturing survey, and manufacturing and trade inventory and sales.
Wyckoff’s Daily Risk Rating: 5.0 (The geopolitical scene is quiet at present, in the view of traders and investors.)
(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.
U.S. STOCK INDEXES
S&P 500 September e-mini futures: Prices are near steady in early trading. Prices are hovering not far below the recent record high. 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 to bullish early today. Today, shorter-term technical resistance comes in at the record high of 1,978.25 and then at 1,990.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 1,962.50 and then at 1,950.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5
Nasdaq index futures: Prices are slightly higher early today and hovering near Monday’s 14-year high. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at Monday’s high of 3,931.00 and then at 3,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,900.00 and then at 3,880.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.0.
Dow futures: Prices are firmer in early U.S. trading and hovering near Monday’s record high. Buy stops likely reside just above technical resistance at Monday’s high of 17,015 and then at 17,050. Sell stops likely reside just below technical support at 16,978 and then at 16,950. 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 below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 6.0
U.S. TREASURY BONDS AND NOTES
September U.S. T-Bonds: Prices are firmer early today. Bulls have the firm overall 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 neutral early today. Shorter-term resistance lies at the overnight high of 137 7/32 and then at Monday’s high of 137 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 27/32 and then at 136 16/32. 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. 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 neutral early today. Shorter-term resistance lies at the overnight high of 125.05.5 and then at this week’s high of 125.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.31.0 and then at 124.24.0. 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. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.320 and then at last week’s high of 80.405. Shorter-term support is seen at Monday’s low of 80.120 and then at 80.000. Wyckoff's Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
August Nymex crude oil prices are lower in early U.S. trading and hit a two-month low overnight. Bulls have faded badly to suggest a near-term market top is in place. In August Nymex crude, look for buy stops to reside just above resistance at $101.00 and then at Monday’s high of $101.20. Look for sell stops just below technical support at $100.00 and then at $99.50. Wyckoff's Intra-Day Market Rating: 4.0
Markets were weaker in overnight trading. Not much new in the grains. Bears are in firm technical command. Weather in the Corn Belt remains nearly ideal for growing crops, albeit cool at present. Extended weather forecasts presently still see no excessively dry or hot weather on the horizon. The fact that most grain market watcher attitudes are so extremely bearish at present does hint of market bottoms being not far away.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.