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Wyckoff's Morning Report: Nervous Markets Following Action on Syria

28 August 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - As the U.S. appears poised to take military action against Syria after its government regime used chemical weapons against its citizens, the market place is extra nervous, which has favored safe-haven assets such as gold and U.S. Treasuries.

Gold prices hit a 3.5-month high overnight and are now up around 20% from the June low, which was a nearly three-year low. A long-time gauge of a market entering bull market territory is when its price moves up by 20% from its last major low.

Crude oil prices have also risen sharply recently and are at a two-year high, on worries about disruptions to oil exports from the Middle East.

Asian and European stock markets were again under pressure Wednesday on the Syria tensions.

There are worries any U.S. military intervention in Syria could escalate into further instability and violence in the already volatile Middle East.

Specifically, the market place wonders what the Syrian regime will do after it’s been hit with U.S. missiles.

Will it attack Israel? Will it use more chemical weapons? Will Iran get involved? There is an old saying that the first thing that goes out the window during a major military operation is the original plan.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage application survey, pending home sales and the weekly DOE energy stocks report.--Jim

U.S. Dollar Index

The September U.S. dollar index is higher in early U.S. trading, on more short covering and some safe-haven buying.

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 this week’s high of 81.615 and then at last week’s high of 81.950. Shorter-term support is seen at the overnight low of 81.135 and then at 81.000. Wyckoff's Intra Day Market Rating: 6.0

NYMEX Crude Oil

October Nymex crude oil prices are solidly higher early today and hit a more than two-year high overnight.

The Middle East unrest is boosting oil. Crude bulls have the solid overall near-term technical advantage.

In October Nymex crude, look for buy stops to reside just above resistance at $111.00 and then at the overnight contract high of $112.24.

Look for sell stops just below technical support at $109.00 and then at $107.95. Wyckoff's Intra-Day Market Rating: 7.5

Grains

Markets were slightly higher overnight. Major heat and little to no rain are still in the U.S. Corn Belt weather forecast for the next several days.

That is still bullish for soybeans and corn. The risk aversion in the market place due to the Syria tensions has caused the speculators to back away from the long side of the grains this week. 

The technical postures of corn and soybeans have turned more bullish recently. Wheat remains overall technically bearish, but will follow corn and soybeans if those markets continue to rally.

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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