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Jim Wyckoff's Morning Report: Tensions Increase Between Russia and West

17 July 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the U.S. and European Union have slapped new and tough sanctions on Russia.

Russia reacted with bellicose rhetoric that has ratcheted up tensions between it and the West, regarding Russia’s annexation of part of Ukraine a few months ago. Asian and European stock markets were pressured a bit on this news. However, the overall market place is presently not placing high priority on several geopolitical matters that have the potential to flare up quickly.

There was still more downbeat economic data released from the European Union Thursday. The bloc reported its construction spending fell 1.5% from April to May, but was up 3.5% from a year ago. The EU also reported its annual inflation rate remained at a very low 0.5% in June. The very low inflation and weak economic numbers in the EU have prompted the European Central Bank to inject monetary policy stimulus this summer, and more easing is likely on the way in the coming weeks.

In other news, reports say India gold imports rose by 65% in June, despite no movement by the Indian government to relax gold import duties.

U.S. economic data due for release Thursday includes the weekly jobless claims report, new residential construction, and the Philadelphia Fed business survey.

Wyckoff’s Daily Risk Rating: 6.0 (While the geopolitical tension in the market place is light at present, I suspect one or more of the simmering hot spots in the world will become a front-burner matter for markets at some point not too far down the road.)

(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 lower in early trading, on profit taking. 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 bearish early today. Today, shorter-term technical resistance comes in at overnight high of 1,972.75 and then at the record high of 1,978.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,958.75 and then at 1,950.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.0

Nasdaq index futures: Prices are lower in early trading today and seeing profit taking. 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 the overnight high of 3,920.50 and then at Wednesday’s high of 3,942.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 3,880.00 and then at 3,865.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are weaker in early U.S. trading on profit taking after hitting a record high Wednesday. Buy stops likely reside just above technical resistance at Wednesday’s high of 17,065 and then at 17,100. Sell stops likely reside just below technical support at 17,000 and then at this week’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 bullish early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher and hit a seven-week high early today. Bulls have the solid 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 bullish early today. Shorter-term resistance lies at the overnight high of 137 25/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 137 8/32 and then at 137 even. 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. 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 to bullish early today. Shorter-term resistance lies at this week’s high of 125.08.0 and then at 125.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.31.0 and then at this week’s low of 124.24.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The September U.S. dollar index is slightly lower on a corrective pullback from recent gains that saw prices hit a four-week high Wednesday. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at Wednesday’s high of 80.655 and then at 80.800. Shorter-term support is seen at 80.500 and then at Wednesday’s low of 80.420. Wyckoff's Intra Day Market Rating: 4.5

NYMEX CRUDE OIL

August Nymex crude oil prices are higher again in early U.S. trading and seeing more short covering after hitting a two-month low on Tuesday. Bulls are regaining some upside momentum to begin to suggest a near-term market low 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 $102.00 and then at the overnight low of $101.27. Wyckoff's Intra-Day Market Rating: 6.0

GRAINS

Markets were mostly weaker in overnight trading. On tap Thursday is the weekly USDA export inspections report. Bears remain in firm technical command. While weather in the Corn Belt remains good for growing crops, a drier pattern is now developing that will be closely monitored. The fact that most grain market watcher attitudes got so extremely bearish recently does hint of market bottoms being in place. But make no mistake: Bulls have very heavy lifting to do in the near term to suggest price uptrends can be sustained in the grain futures markets.

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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