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Jim Wyckoff's Morning Report: Markets Slightly Higher Overnight

06 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The European Stoxx 600 index hit another five-year high overnight on growing notions the European Central Bank will soon ease its monetary policy by lowering interest rates.

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.

Still, the majority of analysts and economists polled believe the ECB won’t make a policy move on Thursday.

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.

The recent EU inflation data bolsters ideas the ECB could move to ease its monetary policy in an effort to keep the tepid EU economic recovery moving forward. On Wednesday the OECD reported inflation in the major world economies in September declined for the second straight month. Annual inflation in the OECD’s 34 developed countries fell to 1.5% from 1.7% in August.

These recent inflation numbers fall favorably into the camp of those market watchers wanting
easy money policies of the world’s major central banks to continue.

Traders and investors are looking ahead to Friday’s key U.S. employment report for October. The non-farm payrolls number of that report is expected to have grown by around 120,000.

The jobs report will be a gauge in helping the market place figure out when the Federal Reserve will start to wind down its quantitative easing of monetary policy.

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.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Challenger job cuts report, leading economic indicators, the global services PMI, the weekly DOE energy stocks report, and the U.S. Treasury announces its quarterly refunding package.

(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.)

Wednesday’s Wyckoff’s Daily Risk Rating: 4.0 (No major developments overnight, or expected on Wednesday.

However, ECB meeting Thursday and U.S. jobs data Friday will move the scale to more risk aversion, just ahead of the data’s release.)

--Jim

U.S. Dollar Index

The December U.S. dollar index is lower early today. Slow stochastics for the dollar index are bearish early today.

The dollar index finds shorter-term technical resistance at the overnight high of 80.800 and then at this week’s high of 81.025. Shorter-term support is seen at 80.500 and then at 80.320. Wyckoff's Intra Day Market Rating: 4.0

NYMEX Crude Oil

December Nymex crude oil prices are firmer early today on short covering after hitting a more-than-four-month low on Tuesday.

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 the overnight low of $93.65 and then at $93.00. Wyckoff's Intra-Day Market Rating: 5.5

Grains

Markets were slightly higher overnight. U.S. corn and soybean harvest is well over half-completed and the bearish cash grain movement and hedge selling should be fading soon. 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 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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