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Jim Wyckoff's Morning Report: Crude Oil Prices Weaker Today

22 May 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place is mostly on hold Wednesday morning, awaiting Federal Reserve Chairman Ben Bernanke’s speech on the economy and monetary policy before the Congress later in the morning.

The Fed’s FOMC minutes are also due out Wednesday afternoon. Traders and investors will closely scrutinize Bernanke’s remarks and the FOMC minutes for clues on the U.S. central bank’s potential course of monetary policy in the coming weeks and months. There has been a growing belief in the market place that the Fed is aiming to wind down its quantitative easing program (QE3) sooner rather than later. The term presently bandied about is “tapering” of the Fed’s massive monthly bond-buying program.

However, there is no clear consensus among market and Fed watchers regarding what the Fed will do with its monetary policy. There is even speculation that Bernanke on Wednesday will re-emphasize his commitment to easy money policies in the coming months. New York Federal Reserve Bank President William Dudley late Tuesday said it will take three or four months from now to determine if the U.S. central bank should begin tapering its monthly bond-buying program. The Bank of Japan at its regular meeting on Wednesday made no major changes to its monetary policy, which was what the market place expected. The BOJ said the Japanese economy is starting to improve.

The Japanese yen resumed its descent on the BOJ news. On Thursday, there will be key manufacturing data out of China released, which will also garner close market attention. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, the weekly DOE energy stocks report, and the FOMC minutes.

US Dollar Index

The U.S. dollar index is slightly higher in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 84.300 and then at last week’s high of 84.515. Shorter-term support is seen at the overnight low of 83.760 and then at 83.570. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

Crude oil prices are weaker early today. Bulls still have the slight near-term technical advantage but trading remains choppy. In July Nymex crude, look for buy stops to reside just above resistance at $96.00 and then at $96.50. Look for sell stops just below technical support at the overnight low of $95.34 and then at $95.00. Wyckoff's Intra-Day Market Rating: 4.5.


Markets were narrowly mixed in overnight trading. Corn bulls are fading, which is also limiting the upside in wheat. Soybean bulls are making a move that is impressive. Monday’s weekly USDA crop progress report showed big progress made planting the U.S. corn crop last week, and that’s the major bearish factor for corn at present.

Soybeans see a tight U.S. cash market and an improving chart posture inviting buying interest. Weather in the U.S. Corn Belt is still a main focus for grain traders. Showers and thunderstorms recently, and more in the forecast, are still delaying seeding of corn and soybeans. However,
traders reckon the bearish effect of soil moisture levels being recharged after last year’s major drought outweigh the bullish planting delays.

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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