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Jim Wyckoff's Morning Report: Markets Higher Overnight

21 August 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The market place is quieter early Wednesday, as traders and investors await the Federal Reserve’s FOMC minutes that are released in the afternoon.

Market watchers will be looking at the minutes for some clarity on the near future path of U.S. monetary policy.

Markets could become volatile in the immediate aftermath of the FOMC minutes’ release. There is also a world central bankers meeting in Wyoming that begins Wednesday. However, Fed Chairman Ben Bernanke will not attend it and no major proclamations are expected to come out of that event.

The recent turmoil in Asian currency and financial markets has somewhat stabilized, at least for the
moment, Wednesday. The Indian Rupee and the Indonesian Rupiah currencies have been hardest hit.

Indian and Indonesian central bank officials are taking action to stabilize their currencies, but likely with only very limited success.

There are still worries about an “Asian contagion” situation that has in the past spooked markets
worldwide. Rising interest rates in the major world economies have put pressure on the periphery currencies.

The higher rates in the major economies have started to reverse the flows of investor monies that had been moving into the periphery country markets the past few years.

Just Wednesday, a German government bond auction fetched the highest yields in a year and a half. U.S. government bond and note yields are also on the rise this week.

An Asian currency contagion would likely prompt keen safe-haven demand for gold. After the FOMC minutes are digested by the market place Wednesday afternoon attention will quickly turn to Chinese manufacturing data that is due out Thursday.

China is the world’s second-largest economy, but the leading worldwide importer of many key raw commodities.

Traders and investors are still watching the Egypt unrest, which continues to see violence between citizens and government militia.

This situation has appeared to not worsen this week, which has allowed traders to focus on other matters.

Any escalation in violence is likely to impact the market place, and could also prompt a rise in demand for safe-haven assets, including gold.

As of this writing Wednesday morning, breaking news reports said Syria has used chemical weapons against its civilians, with hundreds killed.

This matter will be closely monitored by the market place, and is yet another geopolitical hotspot that could flare up to become a major markets factor.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, the weekly DOE liquid energy stocks report and the FOMC minutes.--Jim

U.S. Dollar Index

The September U.S. dollar index is higher in early U.S. trading, on short covering in a bear market. The bears still have the 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 81.170 and then at this week’s high of 81.415. Shorter-term support is seen at the overnight low of 80.925 and then at this week’s low of 80.770. Wyckoff's Intra Day Market Rating: 5.5

NYMEX Crude Oil

October Nymex crude oil prices are lower again early today on more profit taking from recent gains. Bulls still have the overall near-term technical advantage but are fading a bit.

In October Nymex crude, look for buy stops to reside just above resistance at the overnight high of $105.35 and then at $106.00. Look for sell stops just below technical support at the overnight low of $104.43 and then at $104.00. Wyckoff's Intra-Day Market Rating: 4.5

Grains

Markets were higher in overnight trading, led by soybeans. A weather market is playing out in the grains—especially for soybeans and to a lesser degree corn.

The western U.S. Corn Belt has portions that remain very dry. The recent good gains in corn suggest that market has put in a bottom. 

For soybeans, the strong gains suggest prices can continue to trend sideways to higher in the near term.

Wheat will follow the corn market. The Pro Farmer Midwest Crop Tour is in progress. So far, the early results show good crop yield potential, which has been a bit 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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