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Jim Wyckoff's Morning Report: Rare Upbeat Economic Data

Jim Wyckoff's Morning Report: Rare Upbeat Economic Data

12 September 2014

GLOBAL - In overnight news, there was a rare upbeat economic report from the European Union.

The EU’s industrial production was reported up 1.0% in July from June and up 2.2% from a year ago. Forecasts called for a 0.6% rise in July from June. EU industrial output was up 0.2% in the second quarter, compared to up 0.1% in the first quarter.

On the geopolitics front, the U.S. military’s likely escalating action against the ISIS terrorists was met with a threat from Russia Thursday. Russia said any U.S. military action in Syria would be considered an act of aggression against Russia. Syria is a main ally of Russia. Meantime, the Russia-Ukraine cease-fire is holding up. New European Union sanctions on Russia will go into effect on Friday. Still, the market place views the overall world geopolitical situation as static, which has allowed trader and investor risk appetite to remain higher and keep risk aversion in check. It’s still my bias that the market place’s present apathy toward geopolitics will not last long.

U.S. economic data due for release Friday includes import and export prices, retail sales, the University of Michigan consumer sentiment survey, and manufacturing and trade inventories.

Traders and investors are looking ahead to next week, and a more robust batch of economic data points, highlighted by the meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). Next week is also the much-anticipated referendum on Scotland’s independence from the U.K. Polls are now indicating Scots will not opt to pull away from the United Kingdom.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is now less focused on the tensions between Russia and Ukraine, and on other world hot spots. But it’s my bias this condition will not last and that geopolitics will have a bigger influence on markets in the coming weeks.)

(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 December e-mini futures: Prices are near steady in early trading. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 1,998.00 and then at the record high of 2,002.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,973.75 and then at 1,960.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady in early trading today. Bulls are still in technical control. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-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 4,100.00 and then at this week’s 14-year high of 4,106.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,070.00 and then at 4,060.00. 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. Buy stops likely reside just above technical resistance at 17,000 and then at 17,050. Sell stops likely reside just below technical support at this week’s low of 16,895 and then at 16,850. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are bearish early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are lower early today and hit a five-week low. Bulls are fading fast. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 137 3/32 and then at 137 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at 136 16/32 even and then at 136 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

December U.S. T-Notes: Prices are lower in early trading and hit a five-week low. Bulls are fading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 124.14.5 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.08.0 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The December U.S. dollar index is slightly lower in early trading but hovering near this week’s contract and 14-month 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 the overnight high of 84.535 and then at the contract high of 84.650. Shorter-term support is seen at 84.200 and then at 84.000. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

October Nymex crude oil prices are slightly higher on tepid short covering in a bear market. Prices Thursday hit a seven-month low. Bears still have the firm overall near-term technical advantage as prices are in an 11-week-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at the overnight high of $93.67 and then at $94.00. Look for sell stops just below technical support at the overnight low of $92.79 and then at $92.00. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were mixed in overnight trading. A bearish monthly USDA supply and demand report Thursday is being digested as corn, soybeans and wheat prices all fell to new contract lows in the wake of the USDA data. Bears remain in full technical control and there are no early technical clues to suggest market bottoms are close at hand. It’s likely that frost will nip crops in the northern Corn Belt and wheat region in the next 24 hours. Right now, that is not a big market factor.

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