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Jim Wyckoff's Morning Report: Markets Firmer Overnight

24 July 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - China manufacturing data came in weaker than expected Wednesday. The preliminary HSBC China purchasing managers’ index fell to 47.7 in July versus a final reading of 48.2 in June, and is now at an 11-month low.

A reading below 50.0 indicates contraction. Asian stock markets were pressured on the data. The weaker string of China economic data recently is laying the groundwork for more stimulative monetary policy measures coming from the Chinese government.

China’s premier this week hinted at such. That would be bullish for the raw commodity sector, given the world’s most populous nation and world’s second-largest economy’s voracious appetite for raw commodities.

The European Union’s preliminary Markit purchasing managers’ index rose to 50.4 in July from 48.7 in June, which is the first reading above 50.0 in a year and a half and suggests the Euro zone is slowly creeping out of its economic recession.

European stock markets rose and the Euro currency rallied against the U.S. dollar on the upbeat economic data. German bond market prices dropped sharply, which suggests better risk appetite among European investors. U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the US flash manufacturing PMI, new residential sales, and the weekly DOE liquid energy stocks report. - Jim

U.S. Dollar Index

The September U.S. dollar index is slightly firmer in early U.S. trading, on tepid short covering. Bears have the overall near-term technical advantage.

Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 82.320 and then at 82.500. Shorter-term support is
seen at 82.000 and then at 81.750. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

Crude oil prices are near steady early today. Bulls still have the overall near-term technical advantage.

In September Nymex crude, look for buy stops to reside just above resistance at $108.00 and then at last week’s high of $108.93.

Look for sell stops just below technical support at the overnight low of $106.87 and then at $106.00. Wyckoff's Intra-Day Market Rating: 5.0

Grains

Markets were mostly firmer in overnight trading, on tepid short covering from recent selling pressure that has corn and wheat in deep bear markets, while soybean bulls and bears struggle for near-term control.

The U.S. Corn Belt has received beneficial rains the past few days, and temperatures have cooled down significantly right during the key pollination stage of corn crop development.

That’s bearish and is limiting buying interest across the grains complex. Some more rain chances are in the forecast for the coming days, along with non-threatening temperatures. This latest “weather market” in corn and soybeans has fizzled.

TheCropSite News Desk

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