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Jim Wyckoff's Morning Report: 'Risk-Off' Day in the Market place

28 August 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It’s a “risk-off” day in the market place Thursday following reports the Ukrainian president said the Russian military has invaded his country and is occupying eastern Ukraine towns and villages. There is reportedly ongoing fighting between the Russian and Ukraine armies. A Russian official denied that Russian troops are in eastern Ukraine.

Gold, U.S. Treasuries and the U.S. dollar index are all supported on safe-haven demand amid this news. Meantime, world stock markets are seeing selling pressure from the keener risk aversion in the market place Thursday.

It had been a subdued trading week, on this unofficial last week of summer, heading into the three-day U.S. Labor Day holiday weekend. Now, with geopolitical tensions rising, the three-day weekend and all that could happen in world hotspots during that time, many traders and investors will take action the next two trading sessions to reduce their risk exposure in the market place.

There is important U.S. economic data due for release Thursday, including the weekly jobless claims report, the second-quarter gross domestic product report, pending home sales, and the Kansas City Fed manufacturing survey.

Wyckoff’s Daily Risk Rating: 7.5 (The market place is now focused on the tensions between Russia and Ukraine, heading into a long U.S. holiday 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.

US STOCK INDEXES

S&P 500 September e-mini futures: Prices are weaker in early trading, on profit taking from recent gains. Prices Tuesday hit a record high. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bearish early today. Today, shorter-term technical resistance comes in at Tuesday’s record high of 1,994.50 and then at 2,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 1,979.50 and then at 1,970.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are lower in early trading today, on profit taking from recent gains. Bulls are still in firm technical command. Shorter-term moving averages (4- 9-and 18-day) are still 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 4,072.75 and then at this week’s high of 4,077.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,050.00 and then at 4,035.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are weaker in early U.S. trading, on profit taking from recent gains that this week saw prices hit a record high. Buy stops likely reside just above technical resistance at 17,093 and then at Wednesday’s high of 17,115. Sell stops likely reside just below technical support at 17,000 and then at this week’s low of 16,970. Shorter-term moving averages are still 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: 4.5

US TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are higher early today and hit a new contract high overnight. 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 140 12/32 and then at 140 24/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 139 25/32 and then at 139 16/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.5

December U.S. T-Notes: Prices are higher in early trading. Bulls have the firm 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 125.30.5 and then at the contract high of 126.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 125.20.5 and then at 125.16.0. 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 firmer in early trading and seeing some safe-have demand. Bulls 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 the overnight high of 82.675 and then at the contract high of 82.855. Shorter-term support is seen at the overnight low of 82.450 and then at 82.230. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

October Nymex crude oil prices are near steady in early U.S. trading. 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 $94.50 and then at $95.00. Look for sell stops just below technical support at the overnight low of $93.45 and then at $93.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were firmer in overnight trading, on short covering and some bargain hunting. Traders will closely examine this morning’s weekly USDA export sales report, as the focus will soon shift from likely record-large U.S. corn and soybean crops to the demand side of the equation. Bears are in full technical command of the grains and fundamentals are also mostly bearish.

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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