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Jim Wyckoff's Morning Report: Market Place Quieter Overnight

26 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place was quieter overnight and could remain subdued the rest of this week, ahead of the unofficial end of summer that comes with the approaching US Labor Day holiday weekend.

One underlying theme early this week is the rallying U.S. dollar index and slumping Euro currency. The comments from European Central Bank president Mario Draghi late last week in Jackson Hole, Wyoming, are concerning to many market watchers. Draghi strongly hinted the ECB is set to implement more monetary stimulus measures to prop up the flagging European Union economy—and to ward off the threat of deflation in the bloc. The state of the EU’s economy is prompting some increased demand for safe-haven assets. German bonds are hovering near record-low yields, while U.S. Treasury yields have also dropped significantly recently. Safe-haven gold is also seeing a good bounce Tuesday morning. With this increasingly interconnected world, it’s hard to imagine other major world economies being healthy when the European Union’s is so sickly.

The other theme in the market place is new record highs, or multi-year highs, in the major U.S. stock indexes this week. It’s been a “perfect storm” for the U.S. stock market recently: U.S. economic growth that’s not too hot and not too cold; an economy that’s still awash in cash from years of easy money policy from the Federal Reserve; and very low inflation that makes returns from the stock market look better than other asset classes. However, there are a few early clues this perfect storm for the equities market is ending. One is the U.S. Fed has hinted just recently it will move sooner rather than later to raise interest rates if the U.S. economy continues to show improvement.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, durable goods orders, the S&P-Case/Shiller home price index, the monthly house price index, the Richmond Fed business survey, and the consumer confidence index.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is somewhat less focused on the present geopolitical hotspots early this week.)

(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.

US STOCK INDEXES

S&P 500 September e-mini futures: Prices are slightly higher in early trading. 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 2,000.00 and then at 2,015.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 1,988.75 and then at 1,980.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are firmer in early trading today. Bulls are in solid 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 Monday’s high of 4,077.00 and then at 4,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 4,059.50 and then at 4,050.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are firmer in early U.S. trading. Bulls still have upside near-term technical momentum. Buy stops likely reside just above technical resistance at Monday’s record high of 17,105 and then at 17,150. Sell stops likely reside just below technical support at Monday’s low of 17,045 and then at 17,000. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 5.5

US TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are firmer early today and not far below the recent contract high. 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 high of 139 21/32 and then at 140 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 139 10/32 and then at 139 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

December U.S. T-Notes: Prices are higher in early trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below 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 the overnight high of 125.18.5 and then at 125.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.12.0 and then at Monday’s low of 125.05.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

US DOLLAR INDEX

The December U.S. dollar index is near steady in early trading and hovering near Monday’s contract high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Monday’s high of 82.775 and then at 83.00.0. Shorter-term support is seen at 82.500 and then at 82.230. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

October Nymex crude oil prices are slightly higher in early U.S. trading, on tepid short covering. 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 $94.50. Look for sell stops just below technical support at $93.00 and then at last week’s low of $92.50. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mostly weaker in overnight trading. Bears remain in full technical command of the grains and fundamentals are also bearish. Weekly USDA crop progress reports late Monday showed corn and soybean crops in very good condition, heading down the stretch. Focus is less on weather and more up the demand side of the equation for grains. Harvest of U.S. corn and soybeans begins in earnest in a few weeks.

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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