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Jim Wyckoff's Morning Report: Markets Await Federal Reserve Report

Jim Wyckoff's Morning Report: Markets Await Federal Reserve Report

20 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The Federal Reserve’s FOMC minutes’ release on Wednesday afternoon is the economic report highlight of the day.

As usual, the report will be parsed and will be closely scrutinized for clues on future U.S. monetary policy direction. A main question among many market watchers is specifically when the Fed will implement its first interest rate rise in many years. The last FOMC minutes report was met with a yawn by the market place, with very little change in wording in the statement.

In overnight news, the German government auctioned its two-year note (the Schatz) at a zero percent yield, amid strong investor demand. This underscores the keener risk aversion still in the market place, especially in the European Union, where slow to negative economic growth and very low inflation are serious concerns. It was also reported that German producer prices fell 0.1% on the month and were down 0.8% on the year in July.

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 on Friday in Jackson Hole.

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

A feature in the market place recently has been a stronger U.S. dollar against the other major currencies of the world. The U.S. dollar index, which is a basket of six major currencies weighted against the greenback, hit an 11-month high overnight. There has been increased safe-haven demand for the dollar amid the recent heightened geopolitical tensions. The stronger dollar is a bearish underlying factor for the raw commodity sector.

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 near steady in early trading and hovering not far below 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 early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 1,979.75 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 Tuesday’s low of 1,968.28 and then at this week’s low of 1,955.75. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly lower in early trading today, on mild profit taking after hitting a 14-year high on Tuesday. Bulls are still 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 neutral early today. Shorter-term technical resistance is seen at Tuesday’s high of 4,039.50 and then at 4,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Tuesday’s low of 4,017.50 and then at 4,000.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady in early U.S. trading. Bulls still have good upside near-term technical momentum. Buy stops likely reside just above technical resistance at Tuesday’s high of 16,900 and then at 16,950. Sell stops likely reside just below technical support at Tuesday’s low of 16,835 and then at 16,800. Shorter-term moving averages are neutral early today, as the 4-day moving average is above 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 bullish early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are firmer early today. Bulls still 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 the overnight high of 138 19/32 and then at 139 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 138 8/32 and then at 138 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

December U.S. T-Notes: Prices are slightly lower in early trading. Bulls still 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 bearish early today. Shorter-term resistance lies at the overnight high of 125.20.0 and then at this week’s high of 125.30.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.13.0 and then at 125.08.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The September U.S. dollar index is higher in early trading and hit an 11-month high overnight. Bulls have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 82.170 and then at 82.25.0. Shorter-term support is seen at the overnight low of 81.930 and then at 81.775. Wyckoff's Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

October Nymex crude oil prices are firmer in early U.S. trading, on mild short covering after hitting a 6.5-month low on Tuesday. Bears still have the firm overall near-term technical advantage as prices are in a steep two-month-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at $94.00 and then at Tuesday’s high of $94.37. Look for sell stops just below technical support at this week’s low of $92.62 and then at $92.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mixed in overnight trading. 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 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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