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Jim Wyckoff's Morning Report: Markets Steady to Firmer Overnight

05 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - Economic news out of China overnight showed its services PMI rose to 52.6 in October from 52.4 the previous month. This continues a string of mostly upbeat economic data coming out of China the past few months.

China’s Communist party meets this week, during which time major plans and economic reforms are unveiled by the leaders of the country.

The world market place will be closely watching for any proclamations coming from that confab.

In the European Union, the bloc’s producer price index fell at the fastest annual rate in three years, it was reported Tuesday.

EU producer prices rose 0.1% in August, month-on- month, but were down 0.9% on the year. Tuesday’s EU inflation numbers, combined with similar figures released last week, are worrisome as they suggest deflationary conditions could be on the horizon for the EU.

Tuesday’s data bolsters ideas the European Central Bank could move to ease its monetary policy in an effort to keep the tepid EU economic recovery moving forward. The ECB monthly monetary policy meeting is Thursday.

The Euro currency has dropped significantly in value against the U.S. dollar just recently, on beliefs the ECB will soon cut its key interest rate.

In other EU news, the 17-nation bloc’s official economists said Tuesday the collective economy’s unemployment rate will remain near record highs through 2015.

Government austerity and debt reduction will curtail business investment and consumer spending. The economists said 2013 will end with another year of overall economic recession—the third in five

Reports Tuesday said consumer demand for physical gold in India was only half of normal heading up to the key Diwali festival.

Added Indian government taxes and other import hurdles crimped consumer demand in this major gold-consuming nation.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the IBD/TIPP economic optimism index, and the ISM
non-manufacturing report on business.

(New item: Wyckoff’s Daily Risk Rating is now your way to quickly gauge investor risk appetite in the world market place each day.

Each day I will assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off).

Each morning I will look at several markets and scan the world’s news headlines to get a sense of how risk appetite in the market place will shape for the trading day.

For example, extreme readings in my Daily Risk Rating would be a very bullish U.S. jobs report that would fully cheer investors—Wyckoff’s Daily Risk Rating would be 1.

Conversely, a daily rating of 10 would be an unexpected military confrontation in the Middle East that included combat.

Most days Wyckoff’s Daily Risk Rating will be around neutral--between 4 and 6.

Tuesday’s Wyckoff’s Daily Risk Rating: 6.0 (No major developments overnight, or expected on Tuesday. Economic data later this week will move the scale to more risk aversion, ahead of the data’s release.)


U.S. Dollar Index

The December U.S. dollar index is slightly higher early today. It appears 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 the overnight high of 80.760 and then at Monday’s high of 81.025. Shorter-term support is seen at 80.500 and then at 80.320. Wyckoff's Intra Day Market Rating: 5.0

NYMEX Crude Oil

December Nymex crude oil prices are weaker early today and hovering near a four-month low. Bears have the overall near-term technical advantage.

Prices are in a nine-week-old downtrend on the daily bar chart. In December Nymex crude, look for buy stops to reside just above resistance at $95.00 and then at $95.50. Look for sell stops just below technical support at $94.00 and then at $93.50. Wyckoff's Intra-Day Market Rating: 4.0


Markets were steady to firmer overnight. U.S. corn and soybean harvest is well over half completed and the related cash grain movement and hedge selling are bearish.

Traders are looking ahead to Friday’s latest monthly supply and demand report. That report is not expected to be bullish and is likely to show record U.S. corn and soybean production.

Technically, the corn bears are still in firm command, while soybeans are slightly bearish on a near-term basis and wheat bears 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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