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Jim Wyckoff's Morning Report: Traders, Investors Uncertain

31 October 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - After digesting Wednesday’s statement from the U.S. Federal Reserve’s Open Market Committee, many traders and investors have now become more uncertain regarding the timing of the Fed starting to wind down its massive quantitative easing program that has been in place for several years.

The FOMC statement on Wednesday said the U.S. economy has made improvements in recent months.

This somewhat more “hawkish” tone of the Fed has led to fresh speculation in the market place that the “tapering” of the Fed’s monthly bond-buying program could some sooner—possibly as soon as the December FOMC meeting.

However, this view is certainly not pervasive in the market place. The latest FOMC statement that did throw a bit more uncertainty in the market place now makes upcoming U.S. economic data even more critical, as the Fed and markets try to get a better reading on the U.S. economy’s present trajectory.

In the European Union overnight, it was reported that the inflation rate for the bloc came in at a four-year low in October, at an annual rate of 0.7%. That rate is well below the European Central
Bank’s target rate of just under 2%.

The low inflationary pressures also give the ECB room to continue its very easy money policies, if EU economic growth continues to languish.

Thursday is an extra important trading day, from a technical perspective. It’s the last trading day of the month. It’s technically significant when, on the last trading day of the month, a market closes at or very near its monthly high or low for that month.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the ISM Chicago business survey and the weekly DOE energy stocks report.

Overnight reports said demand for physical gold in India is slack, despite the festival season approaching.

The Diwali festival of lights is on Sunday. The reports said demand for gold in India this year will be down 10% to 15% from last year, due to higher tax rates on gold imports, and the weakness of the Indian currency.--Jim

U.S. Dollar Index

The December U.S. dollar index is higher early today on more short covering. While bears remain in overall near-term technical control, the bulls are making a move.

A bullish weekly high close on Friday would begin to suggest a market low is in place. Slow stochastics for the dollar index are bullish early today.

The dollar index finds shorter-term technical resistance at 80.250 and then at 80.500. Shorter-term support is seen at 80.000 and then at the overnight low of 79.740. Wyckoff's Intra Day Market Rating: 6.0

NYMEX Crude Oil

December Nymex crude oil prices are slightly lower early today. Bears have the 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 $96.99 and then at $97.50.

Look for sell stops just below technical support at the overnight low of $96.35 and then at the
October low of $95.95. Wyckoff's Intra-Day Market Rating: 4.5

Grains

Markets were firmer overnight on more short covering following recent selling pressure. Traders are awaiting weekly export sales data today, as well as some other USDA data that was held up due to the government shutdown.

There has been very good U.S. harvest progress and that has been bearish for corn and soybeans.

That weakness in corn and soybeans has spilled over into the wheat market. Rains in parts of the Corn Belt have delayed harvesting, but it’s not a major market factor.

Technically, the corn bears are in firm command, while soybean and wheat bears now have the slight 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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