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Jim Wyckoff's Morning Report: Global Stock Markets Under Strong Selling Pressure

Jim Wyckoff's Morning Report: Global Stock Markets Under Strong Selling Pressure

01 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - This is no ordinary summertime Friday. World stock markets were under strong selling pressure overnight, following the U.S. stock market lead from Thursday.

The Dow and S&P 500 stock index futures on Thursday hit multi-week lows and closed at bearish monthly low closes. Thursday’s price action is the strongest technical clue yet that those two stock indexes have put in at least near-term market tops. And the U.S. stock indexes are showing solid follow-through selling pressure in pre-market-hours trading Friday morning. 

Some are scratching their heads trying to figure out what was the impetus for Thursday’s U.S. stock market sell-off. It could well be that no single element was the cause, but instead a combination of several: The troubled Portuguese bank, Banco Espirito, saw its stock price fall 40% Thursday after the bank reported a record loss in the second quarter; The European Union and U.S. this week slapped new and harsher sanctions on Russia; The Israel-Hamas conflict is not de-escalating; Argentina is set to default on another sovereign debt obligation after negotiations between creditors and government officials collapsed; Stronger-than-expected U.S. economic data this week has raised the specter of price inflation becoming problematic down the road; Such has bolstered the notions of some market watchers reckoning the Federal Reserve’s FOMC meeting this week had clues the Fed may raise interest rates sooner than many expect.

Now, traders and investors are awaiting Friday’s U.S. Labor Department employment report—arguably the most important economic report of the month. The report is forecast to see a rise in non-farm payrolls of 230,000 in July versus up 288,000 in June.

There is also a heavy slate of other U.S. economic data due for release Friday, including personal income and outlays, the U.S. manufacturing PMI, the global manufacturing PMI, the University of Michigan consumer sentiment survey, construction spending, the ISM manufacturing report on business, and domestic auto industry sales.

Wyckoff’s Daily Risk Rating: 8.0 (Geopolitics and heightened trader/investor uncertainty are at play in the market place, heading into the weekend.)

(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 and hit a two-month low overnight. Bulls are fading fast. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below 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 1,930.75 and then at 1,942.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,910.50 and then at 1,900.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 3.0

Nasdaq index futures: Prices are lower in early trading today and hit a two-week low overnight. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 3,897.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,855.50 and then at the July low of 3,832.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 3.5.

Dow futures: Prices are lower and hit a 2.5-month low in early U.S. trading. Bulls have faded badly and quickly. Buy stops likely reside just above technical resistance at 16,450 and then at 16,500. Sell stops likely reside just below technical support at 16,350 and then at the May low of 16,310. Shorter-term moving averages are bearish early today, as the 4-day moving average is below 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 bearish early today. Wyckoff's Intra-Day Market Rating: 3.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are lower early today and seeing some more profit taking after hitting a contract high on Tuesday. Bulls still have the overall near-term technical advantage but are fading a bit. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 137 11/32 and then at Thursday’s high of 137 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 29/32 and then at Thursday’s low of 136 14/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

September U.S. T-Notes: Prices are lower in early trading. Bulls are fading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 124.21.0 and then at Thursday’s high of 124.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.14.0 and then at Thursday’s low of 124.07.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The September U.S. dollar index is firmer in early trading and hovering near Thursday’s nearly six-month high. Bulls still have good upside momentum. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 81.660 and then at 81.750. Shorter-term support is seen at Thursday’s low of 81.465 and then at 81.280. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

September Nymex crude oil prices are lower in early U.S. trading and hit a nearly three-month low overnight. Bears have the overall near-term technical advantage and have downside momentum. In September Nymex crude, look for buy stops to reside just above resistance at the overnight high of $98.10 and then at $99.00. Look for sell stops just below technical support at the overnight low of $97.09 and then at $96.50. Wyckoff's Intra-Day Market Rating: 4.0

GRAINS

Markets were mostly weaker in overnight trading. Risk aversion in the entire market place late this week has hit the grain futures markets with selling pressure. Extended weather forecasts out to mid-August are still mostly non-threatening to the corn and soybean crops. However, there are some dry spots in the western Corn Belt. Still, U.S. corn and soybean crops are on pace to have record yields this year. Grain market bears continue have the solid overall near-term technical advantage.

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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