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Jim Wyckoff's Morning Report: Unease in Market Place

08 October 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The partial U.S. government shutdown drags on and is in its eighth day with still no serious movement from either Democrats or Republicans.

There were reports overnight that some “test” bills are being discussed among the Senate and House of Representatives.

There is a steady unease in the world market place at present, but there is still not yet anything close to panic.

The date now being pegged is October 17—the date at which some U.S. government officials now say the U.S. will start to default on its credit obligations.

It appears the budget impasse and government closure could lead right up to the U.S. debt ceiling limit.

Some gold market bulls have expressed frustration their metal has not seen stronger safe-haven demand amid the latest U.S. government fiasco.

Some are saying gold has lost its safe-haven mojo because it’s been in a technical downtrend for months.

More likely is that the market place now has “U.S. government dysfunction fatigue.” Traders and
investors have recently been bombarded with news headlines on the government’s shutdown and debt limit situations.

They are numb to the situation, at present. And in the past 18 months U.S. budget and debt ceiling wrangling had also gripped the market place for a time.

Most of the market place still feels the U.S. government will pass a budget and raise its debt ceiling at the 11th hour.—but not before the usual grandstanding, jawboning, posturing, bickering and politicking that U.S. lawmakers do in situations like this.

However, in the very unlikely scenario that the U.S. government actually starts to default on its debt, or gets its credit rating downgraded by a major credit rating agency, then gold will exhibit its safe-haven status in the market place, and do so in no uncertain terms.

In other overnight news, China’s services purchasing managers’ index (PMI) showed a reading of 52.4 in September from 52.8 in August, according to Markit/HSBC.

German manufacturing orders showed an unexpected decline in August, at down 0.3% from July, as a 1.1% gain was forecast.

The World Bank and International Monetary Fund hold annual meetings in Washington, D.C., at the end of this week.

It would be at the very least awkward to see the host nation and the world’s leading economy and military hobbled by a government shutdown in effect.

Any proclamations or overtures made by the U.S. at the meeting would be at least somewhat discounted by the inability of U.S. lawmakers to agree on a spending plan. U.S. economic data due for release Tuesday includes the NFIB small business index, the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IDB/TIPP economic optimism index, and the IMF world economic outlook.

Most U.S. government economic data is not being released due to the U.S. government closure. However, the Fed’s FOMC minutes will be released Wednesday and will be closely scrutinized by the market place.

Federal Reserve officials are speaking this week. Traders and investors will be very interested in seeing what these officials say about the U.S. government shutdown’s impact on the U.S. economy.--Jim

U.S. Dollar Index

The December U.S. dollar index is slightly higher early today. Bears remain in firm overall near-term technical command. Slow stochastics for the dollar index are bullish early today.

The dollar index finds shorter-term technical resistance at 80.285 and then at 80.500. Shorter-term
support is seen at last week’s low of 79.720 and then at 79.500. Wyckoff's Intra Day Market Rating: 5.0

NYMEX Crude Oil

November Nymex crude oil prices are firmer early today on short covering. Bulls and bears are on a level near-term technical playing field.

In November Nymex crude, look for buy stops to reside just above resistance at the overnight high of $103.94 and then at last week’s high of $104.38.

Look for sell stops just below technical support at the overnight low of $102.85 and then at $102.00. Wyckoff's Intra-Day Market Rating: 5.5


Markets were mixed but mostly firmer overnight. Short covering is featured. The “risk-off” mentality in the overall market place, due to the U.S. government shutdown, remains a mildly bearish underlying factor for all of the grains.

U.S. harvest of soybeans and corn is also seasonally bearish for those markets. With much of USDA closed, there is a keen lack of fresh fundamental news for grain traders to digest, and that also favors the bearish camp due to the uncertainty of the matter. All of the above suggests sideways and choppy trading conditions in the grains this week.

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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