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Jim Wyckoff's Morning Report: Euro Given Modest Boost

22 November 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - In overnight news, the Euro currency was given a modest boost by some upbeat economic data coming out of leading EU economic power Germany.

The Ifo business confidence index rose to 109.3 in November, beating expectations for a reading of 107.7.

The Japanese yen weakened to a multi-year low against several currencies overnight, on ideas the Bank of Japan will continue to ease its already very easy monetary policy. A BOJ official said Friday the central bank will continue to work toward getting inflation at a 2% annual rate.

The past few months the market place has appeared to be consumed by “taper talk,” regarding just when the U.S. Federal Reserve will or will not make its long-anticipated move to cut back on its monthly bond-buying program, also called quantitative easing. The precious metals and other markets have been impacted by when the precise timing of such a move may occur. Generally, the market place has seen a mostly bullish reaction to any news that suggests it may take longer for the Fed to start tapering its monetary policy.

I got a note from a gold market watcher Thursday saying he hopes the Fed starts to taper right away—get it over with. His reasoning: Such would put a top in the stock markets and money coming out of stocks would flow into other asset classes, including precious metals. I cannot disagree with his premise.

The world’s major economies are awash in cash seeking the best returns. At present, the vast majority of traders and investors view the stock market as the best game in town for investment returns. When too many people get on one side of the boat, we all know what happens--and history shows it, too. I don’t know precisely when the stock market bubble will burst, but history shows it will. My bias is that it will be sooner rather than later. When money starts moving away from the stock market, the bulls in other asset classes will be licking their chops.

U.S. economic data due for release Friday includes the Kansas City Fed business survey and the manufacturing activity index.

Wyckoff’s Daily Risk Rating: 6.0 (The market place does not have much news headline risk at present, but the weekend could find new developments come Monday morning—thus the slight uptick in the risk rating today.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I 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).

--Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are near steady in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are still bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Monday’s record high of 1,799.50 and then at 1,810.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,775.50 and then at 1,765.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is located at the overnight high of 3,408.00 and then at this week’s high of 3,425.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,375.00 and then at this week’s low of 3,358.50. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are near steady early today. Buy stops likely reside just above technical resistance at 16,000 and then at 16,050. Sell stops likely reside just below technical support at Thursday’s low of 15,925 and then at 15,900. Shorter-term moving averages are bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady early today as the market tries to stabilize after hitting a two-month low Thursday. The bears still have some downside momentum. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 130 1/32 and then at 130 16/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129 22/32 and then at 129 12/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are near steady early today. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 125.04.5 and then at 125.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.18.0 and then at the November low of 124.14.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is lower early today. The greenback bears have the overall near-term technical advantage. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.260 and then at this week’s high of 81.505. Shorter-term support is seen at the overnight low of 80.960 and then at this week’s low of 80.750. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

January Nymex crude oil prices are slightly lower early today, following good gains posted Thursday. Bears still have the overall near-term technical advantage. Prices are in an 11-week-old downtrend on the daily bar chart. In January Nymex crude, look for buy stops to reside just above resistance at Thursday’s high of $95.63 and then at $96.00. Look for sell stops just below technical support at $95.00 and then at $94.50. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were mostly firmer overnight on more short covering. Reports say cash basis levels are improving in the U.S., which could mean that the lower prices have attracted fresh export demand for U.S. grains. Focus of the market place has turned more to the demand side of the equation, now that the U.S. harvest is virtually complete. Technically, corn bears are in firm command. Soybean bulls have faded a bit, while wheat bears are in full control.

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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