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Jim Wyckoff's Morning Report: Markets Quieter Overnight

28 October 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It was a quieter overnight trade Monday, amid a lack of major economic data issued overseas and as traders and investors are looking ahead to this week’s U.S. Federal Reserve’s Open Market Committee meeting.

The meeting begins Tuesday and ends Wednesday at midday. The FOMC is expected to leaving U.S. monetary policy unchanged, but as usual traders and investors will be looking for any clues on the timing of changes in policy. Most in the market place believe the Fed will not start to cut back on its monthly bond purchases until early next year—most likely the second quarter at the earliest.

This scenario favors the raw commodity market bulls, including the precious metals markets. Any hints at this week’s FOMC meeting that the “tapering” of monetary policy could come sooner than the second quarter of 2014 would likely be bearish for most markets. Also, beginning in November the European Central Bank starts its stress tests on major financial institutions in the EU. It’s believed that there are a lot of non-performing loans on the books of EU banks, so the stress tests and any bad results could impact the market place.

Such a situation would likely be bullish for the safe-haven gold, and U.S. and German bond markets. U.S. economic data due for release Monday includes industrial production and capacity utilization, pending home sales and the Texas manufacturing outlook survey.

US Dollar Index

The December U.S. dollar index is slightly higher early today on tepid short covering in a bear market after hitting a contract low Friday. Bears remain in strong overall near-term technical control. Slow stochastics for the dollar index are neutral early today. The dollar index finds
shorter-term technical resistance at Friday’s high of 79.380 and then at 79.550. Shorter-term support is seen at the contract low of 79.060 and then at 79.000. Wyckoff's Intra Day Market Rating: 5.0

NYMEX Crude Oil

December Nymex crude oil prices are slightly lower early today. Prices last week hit a nearly four-month low. Bears have the solid overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just
above resistance at the overnight high of $98.05 and then at $98.29. Look for sell stops just below technical support at $97.00 and then at $96.50. Wyckoff's Intra-Day Market Rating: 4.5

Grains

Markets were mostly weaker overnight. Harvest progress in the U.S. Corn Belt remains a seasonally bearish market factor for corn and soybeans. It is believed that U.S. corn harvest is nearing 50% complete, while soybeans are around 80% harvested. Rain is coming to the Corn Belt in the
coming days, which will delay harvesting. Wheat remains supported by Russian and South American wheat crop problems. Technically, the corn bears are in firm command, soybean bulls have the near-term technical edge, and wheat bulls also have the near-term technical advantage.

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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