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Jim Wyckoff's Morning Report: Increased Risk Appetite in Markets

Jim Wyckoff's Morning Report: Increased Risk Appetite in Markets

19 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - There is increased risk appetite in the market place this week, evidenced by firmer stock markets worldwide, including U.S. stock indexes that on Monday hit or are moving in on record or multi-year highs.

Still, there is a significant contingent of traders and investors seeking safe-haven assets given the geopolitical hotspots in the world. Such has driven U.S. Treasury yields to multi-month lows recently, while German bond yields are at record lows of below 1%. Gold is seeing some safe-haven demand support prices, but the stronger U.S. dollar and rallying stock markets are also prompting some downside price pressure to keep trading in the metal choppy.

Traders and investors are awaiting this week’s annual Kansas City Federal Reserve meeting in Jackson Hole, Wyoming, that begins on Thursday. The confab of world central bankers has in the past yielded important U.S. monetary policy speeches and clues to the direction of monetary policy. Fed Chair Janet Yellen and ECB President Mario Draghi are scheduled to speak in Jackson Hole. Before the Jackson Hole event comes the Federal Reserve’s FOMC minutes on Wednesday afternoon, which as usual will be closely scrutinized.

U.S. economic data due for release Tuesday is also significant and includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the consumer price index, real earnings, and new residential construction.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is only somewhat focused on the still-simmering geopolitical matters: the Russia-Ukraine crisis, Iraq and the Gaza strip.)

(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 higher in early trading and hit another three-week high as bulls are making a move back toward the record high scored in July. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at 1,975.00 and then at the record high of 1,985.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,960.00 and then at 1,950.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 6.0

Nasdaq index futures: Prices are higher in early trading today and hit another new 14-year high overnight. Bulls are in firm technical command. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 4,035.00 and then at 4,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,000.00 and then at Monday’s low of 3,986.50. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 7.0.

Dow futures: Prices are higher in early U.S. trading and hit a three-week high. Bulls are have good upside near-term technical momentum. Buy stops likely reside just above technical resistance at 16,850 and then at 16,900. Sell stops likely reside just below technical support at 16,793 and then at Monday’s low of 16,730. Shorter-term moving averages are neutral early today, as the 4-day moving average is above the 9-day. The 9-day moving average is below the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bullish early today. Wyckoff's Intra-Day Market Rating: 6.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are higher 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 early today. Shorter-term resistance lies at Monday’s high of 139 18/32 and then at 140 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 138 18/32 and then at 138 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

December U.S. T-Notes: Prices are firmer 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 neutral early today. Shorter-term resistance lies at Monday’s high of 125.30.0 and then at 126.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.18.0 and then at 125.10.0. 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 higher in early trading. Prices are hovering near the recent nine-month high. Bulls have the firm overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the August high of 81.775 and then at 82.00.0. Shorter-term support is seen at the overnight low of 81.640 and then at 81.500. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

October Nymex crude oil prices are firmer in early U.S. trading, on short covering after hitting a 6.5-month low on Monday. Bears still have the firm overall near-term technical advantage as prices are in a two-month-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at $95.00 and then at $95.84. Look for sell stops just below technical support at Monday’s low of $93.42 and then at $93.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were lower in overnight trading. Not much new: Bears remain in full technical command of the grains and fundamentals are also bearish. This week’s annual Pro Farmer annual Midwest crop tour shows early results pointing to what most already expected: huge U.S. soybean and corn crops. It’s still my bias that the seasonal harvest lows in corn and soybean markets will come early this year, and wheat will be a follower.

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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