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Jim Wyckoff's Morning Report: No Concerns in Marketplace

16 July 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The somewhat surprising lack of concern in the market place regarding geopolitics has prompted better risk appetite in the market place this week.

Tensions are rising on the Gaza strip as Israel prepares to bomb Hamas targets in that region and possibly send in ground troops. European Union sovereign debt concerns, which last week resurfaced after a bank in Portugal was reported in serious trouble, are this week being ignored by traders and investors. The Iraqi civil war and the Russia-Ukraine conflict have faded well to the background of the market place. Maybe it’s the summertime doldrums that have investors and traders more concerned about family vacations and outdoor events and less on geopolitics. I suspect that as the calendar turns to September, or before, the aforementioned matters will be of much greater concern to the market place.

The economic highlight of the trading week is testimony on U.S. monetary policy from Federal Reserve Chair Janet Yellen before the U.S. Congress on Tuesday and Wednesday. Some market watchers took Yellen’s comments to the Senate Tuesday as being a bit hawkish, but that’s a stretch. The buzz after her remarks Tuesday was that she commented on what she perceived to be over-priced stock market sectors. Yellen testifies before the U.S. House Wednesday.

There was upbeat economic news coming from China Wednesday. The world’s second-largest economy had a slightly better-than-expected second-quarter GDP growth rate of 7.5%, year-on-year. A 7.4% growth reading was expected. Asian stock markets were supported on the China GDP data Wednesday. This news is a bullish underlying development for the raw commodity markets.

U.S. corporate earnings reports are also be featured this week. So far, major companies’ earnings have been mostly upbeat.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the producer price index, Treasury international capital data, industrial production and capacity utilization, the NAHB housing market index, and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 6.0 (While the geopolitical tension in the market place is light at present, I suspect the Israel-Hamas fighting could quickly ratchet up concerns among 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.

--Jim

U.S. STOCK INDEXES

S&P 500 September e-mini futures: Prices are firmer in early trading. Prices are hovering near the recent record high. 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 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 the overnight low of 1,967.00 and then at this week’s low of 1,958.75. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher early today and poked to a 14-year high overnight. 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 neutral to bullish early today. Shorter-term technical resistance is seen at 3,940.00 and then at 3,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,913.00 and then at 3,900.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 6.5.

Dow futures: Prices are higher in early U.S. trading and hit a record high overnight. Buy stops likely reside just above technical resistance at Monday’s high of 17,100 and then at 17,150. Sell stops likely reside just below technical support at 17,000 and then at Tuesday’s low of 16,940. Shorter-term moving averages are bullish early today, as the 4-day moving average is above 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: 6.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are slightly higher early today. Bulls still have the 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 to bearish early today. Shorter-term resistance lies at the overnight high of 137 7/32 and then at this week’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 28/32 and then at this week’s low of 136 17/32. 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 the 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 to bearish early today. Shorter-term resistance lies at the overnight high of 125.01.5 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 this week’s low of 124.24.0 and then at 124.16.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The September U.S. dollar index is higher and hit a four-week high in early trading. Bulls are gaining upside momentum. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.615 and then at 80.800. Shorter-term support is seen at the overnight low of 80.420 and then at 80.200. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

August Nymex crude oil prices are higher in early U.S. trading and seeing short covering after hitting a two-month low on Tuesday. Bulls have faded recently to suggest a near-term market top is in place. In August Nymex crude, look for buy stops to reside just above resistance at $101.50 and then at $102.00. Look for sell stops just below technical support at $100.00 and then at $99.50. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were higher in overnight trading on short covering and corrective technical bounces. Bears remain in firm technical command. While weather in the Corn Belt remains nearly ideal for growing crops, a drier pattern is now developing that will be closely monitored. 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.



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