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Jim Wyckoff's Morning Report: Markets Rocked by US Airstrikes on ISIS

Jim Wyckoff's Morning Report: Markets Rocked by US Airstrikes on ISIS

23 September 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - There is risk aversion back in the market place Tuesday following reports overnight that U.S. airstrikes hit the ISIS terrorists at several locations in Iraq and Syria.

Arab U.S. allies in the region also helped the U.S. cause, reports said. Meantime, there were also reports that Israel shot down a Syrian jet that entered its air space. These developments pressured world stock markets and boosted safe-have gold and U.S. Treasuries.

It would not surprise me to see Russian president Putin escalate his military action in the Ukraine region, in order to consolidate Russia’s land-grab while world focus is on the Middle East.

In other news overnight, the preliminary HSBC China manufacturing purchasing managers index (PMI) rose to 50.5 in September versus the final reading of 50.2 in August. That news was considered by the market place to be better than expected but only modestly supported stock markets in Asia overnight. The China news is a mildly bullish underlying factor for the beaten-down raw commodity sector.

The European Union’s Markit composite PMI disappointed Tuesday as it came in at 52.3 in September versus 52.5 in July and was the lowest reading this year. That news helped to sink European stocks. The news supports the notions that EU monetary policy will continue to be eased, while at the same time the U.S. Federal Reserve continues to ratchet in its heretofore very accommodative monetary policy.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. monthly house price index, the U.S. flash manufacturing PMI, and the Richmond Fed business survey.

Wyckoff’s Daily Risk Rating: 7.5 (There is keener risk aversion Tuesday amid the U.S. airstrikes against ISIS terrorists in Syria, and reports that Israel shot down a Syrian jet that entered its air space.)

(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 weaker in early trading, on risk aversion and profit taking after hitting a record high last Friday. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,987.75 and then at 2,000.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the September low of 1,968.00 and then at 1,960.00. 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 and risk aversion after hitting a 14.5-year high last Friday. Bulls are still in overall technical control. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 4,053.25 and then at 4,075.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 4,033.75 and then at 4,025.00. 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 risk aversion and more profit taking after hitting a record high last Friday. Buy stops likely reside just above technical resistance at 17,100 and then at 17,150. Sell stops likely reside just below technical support at 17,000 and then at 16,950. 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 neutral early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

December U.S. T-Bonds: Prices are firmer early today, on safe-haven buying and short covering. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 137 6/32 and then at 137 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 136 22/32 even and then at 136 16/32. 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, on safe-haven demand and short covering. 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 bullish early today. Shorter-term resistance lies at the overnight high of 124.15.5 and then at 124.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.08.0 and then at Monday’s low of 124.01.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 6.0

U.S. DOLLAR INDEX

The December U.S. dollar index is solidly lower in early trading, on profit taking from recent gains that saw prices hit a contract and 14-month high Monday. Bulls still 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 overnight high of 84.820 and then at Monday’s contract high of 84.975. Shorter-term support is seen at the overnight low of 84.475 and then at 84.250. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

November Nymex crude oil prices are firmer early today on short covering in a bear market and on some support from rising tensions in the Middle East. Bears still have the overall near-term technical advantage as prices are in a three-month-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at $92.00 and then at $92.50. Look for sell stops just below technical support at $91.00 and then at Monday’s low of $90.41. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were narrowly mixed in overnight trading. Corn, soybeans and wheat prices are hovering near their recent contract lows. Bears remain in full technical control and there are still no early technical clues to suggest market bottoms are close at hand. This week will see U.S. corn and soybean harvesting pick up the pace significantly. There is no significant rain in the forecast for the Corn Belt to limit harvest progress. Focus will shift from the huge U.S. corn and soybean crops, to the demand side of the equation, in the coming 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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