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Jim Wyckoff's Morning Report: Markets Still Wary of Russian Tensions

21 July 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Geopolitics remains on the front burner of the market place early this week. Last week’s downing of a Malaysian airliner on the Russia-Ukraine border and Israel’s ground offensive against Hamas on the Gaza strip are the dominant fundamentals in the markets Monday morning.

The U.S. has accused Russian separatists of shooting down the Malaysian passenger jet. After some initial trepidation European leaders have now condemned Russia and its president, Vladimir Putin. Meantime, Israel continues to try to root out Hamas and its missile launchers on the Gaza strip.

So far, the Israel-Hamas conflict has not spread to unrest in other Middle Eastern regions. However, these two major geopolitical matters are flashpoints for the markets and are likely to significantly influence trading and markets for at least the near term. My sense is that it’s presently a 50-50 chance that these two geopolitical matters have peaked as far as influencing markets.

Gold, U.S. Treasuries and the U.S. dollar are safe-haven assets that have seen support from the heightened world tensions. Surprising to many is the fact that U.S. stock indexes have been resilient during the geopolitical unrest. The three major U.S. stock indexes showed solid gains Friday and are not far below their recent record or multi-year highs.

U.S. economic data due for release Monday includes the Chicago Fed national activity index.

Wyckoff’s Daily Risk Rating: 8.0 (Russia-Ukraine crisis and Irael-Hamas conflict are front-burner matters for markets.)

(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 weaker in early trading on mild profit taking from solid gains on Friday. 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 the overnight high of 1,971.50 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 1,950.00 and then at last week’s low of 1,942.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are near steady in early trading today. 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 early today. Shorter-term technical resistance is seen at the recent 14-year high of 3,942.00 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 3,921.50 and then at 3,900.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are weaker in early U.S. trading on profit taking. Buy stops likely reside just above technical resistance at Friday’s high of 17,048 and then at the record high of 17,080. Sell stops likely reside just below technical support at 16,950 and then at last week’s low of 16,900. 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 slightly higher early today. Bulls still have the solid overall near-term technical advantage on safe-haven demand. 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 contract high of 138 9/32 and then at the contract high of 138 23/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 138 even and then at Friday’s low of 137 23/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

September U.S. T-Notes: Prices are near steady in early trading. Bulls still 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 125.11.5 and then at 125.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.07.0 and then at 125.00.0. 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 slightly higher in early trading. Bulls still have some upside momentum on their side. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at last week’s high of 80.755 and then at 80.880. Shorter-term support is seen at the overnight low of 80.490 and then at 80.400. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

September Nymex crude oil prices are slightly lower in early U.S. trading. Bulls still have some upside momentum. In September Nymex crude, look for buy stops to reside just above resistance at the overnight high of $102.33 and then at $103.00. Look for sell stops just below technical support at the overnight low of $101.48 and then at $101.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were lower in overnight trading. While some very hot weather will pervade the U.S. Corn Belt for a couple of days, it’s not expected to last. Thus, grain traders still perceive the growing weather for corn and soybeans to be very good with record yields on track. That’s fully bearish.
Bears also remain in firm technical command of 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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