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Jim Wyckoff's Morning Report: Sell-off in World Stock Markets

Jim Wyckoff's Morning Report: Sell-off in World Stock Markets

06 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The feature in the market place Wednesday morning is the sell-off in world stock markets, following the U.S. lead Tuesday afternoon, as investors and traders exhibit keener “risk-off” attitudes.

The U.S. dollar, gold and U.S. Treasuries are seeing safe-haven buying support from renewed attention on the Russia-Ukraine crisis. Reports said Russian president Putin is getting ready to retaliate after his country has been slapped with several economic sanctions recently. There were reports Tuesday afternoon that Russian troops were massing on the Ukraine border. Even though this news was not fresh, it was partly credited with sinking the U.S. stock market Tuesday afternoon.

In other overnight news, the yield on the German five-year bond (the Bobl) dropped to a record low Wednesday, at 0.28%, down from 0.33% last month. The record-low German bond yield is another clue of the heightened risk aversion presently in the market place.

Italy’s GDP was reported down 0.2% in the second quarter from the first, and down 0.3% year-on-year. This means Italy’s economy has slipped back into recession, which is another bearish clue for the collective European Union economy.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the international trade report, and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 7.0 (The market place is again focused on the still-simmering geopolitical matters, namely the Russia-Ukraine crisis.)

(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 2.5-month low. Bulls are fading, to begin to suggest a major market top is in place. 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 1,918.25 and then at Monday’s high of 1,933.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,900.00 and then at 1,891.00. 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. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 3,879.50 and then at 3,900.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,840.00 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: 4.0.

Dow futures: Prices are lower in early U.S. trading, and hit a three-month low overnight. Bulls are fading to suggest a major market top is in place. Buy stops likely reside just above technical resistance at 16,366 and then at 16,400. Sell stops likely reside just below technical support at 16,250 and then at 16,200. 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 neutral early today. Wyckoff's Intra-Day Market Rating: 4.0

U.S. TREASURY BONDS AND NOTES

September U.S. T-Bonds: Prices are higher early today and hit a contract high overnight. Safe-haven buying is featured. 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 bullish early today. Shorter-term resistance lies at the overnight contract high of 139 8/32 and then at 139 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 138 16/32 and then at the overnight low of 138 6/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 7.0

September U.S. T-Notes: Prices are higher and hit a nine-week high in early trading. 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 125.24.5 and then at the contract high of 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 125.16.0 and then at the overnight low of 125.10.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 7.0

U.S. DOLLAR INDEX

The September U.S. dollar index is higher in early trading and hit a nine-month high overnight. Bulls have good upside momentum on safe-haven demand. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.775 and then at 82.000. Shorter-term support is seen at the overnight low of 81.595 and then at Tuesday’s low of 81.370 Wyckoff's Intra Day Market Rating: 7.0

NYMEX CRUDE OIL

September Nymex crude oil prices are firmer in early U.S. trading on short covering after hitting a three-month low on Tuesday. Bears still have the overall near-term technical advantage as prices are in a six-week-old downtrend on the daily bar chart. In September Nymex crude, look for buy stops to reside just above resistance at $98.00 and then at Monday’s high of $98.67. Look for sell stops just below technical support at Tuesday’s low of $97.00 and then at $96.50. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed in overnight trading, on some short covering. Weather forecasts are still non-threatening to the corn and soybean crops. And rain is presently falling in some areas of the western Corn Belt that needed moisture.

This is one of those rare years in which it appears the U.S. corn and soybean crops will not have a significant weather scare develop during the summertime. This has allowed for what will likely be record corn and soybean yields in the U.S. Grain market bears continue have the solid overall near-term technical advantage, which means the path of least resistance for prices will remain sideways to lower in the near term.

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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