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Jim Wyckoff's Morning Report: Markets Mixed Overnight

03 December 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - This is a big week for economic data, highlighted by the European Central Bank’s monthly monetary policy meeting on Thursday and the U.S. jobs report on Friday.

However, there are other key reports out this week, including Wednesday’s U.S. Federal Reserve’s beige book and Thursday’s U.S. GDP report. Traders and investors for many weeks have been obsessing about the precise timing of when the Fed will alter its monetary policy and back off from its monthly bond-buying program—called quantitative easing. Monday’s batch of generally upbeat U.S. data fell into the camp that reckons the Fed will act to taper sooner rather than later. This week’s data will provide at least some insight on the timing of the Fed’s next move. Meantime, the ECB recently eased its monetary policy and the market place is wondering what central bank’s next move will be.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York business report, the IBD/TIPP economic optimism index, and domestic auto industry sales.

In overnight news, the OECD reported inflation in its 34 member economies fell for a third straight month in October—to 1.3% from 1.5% in September, on an annualized basis. The EU statistics agency said Tuesday the EU’s producer prices fell at the fastest rate in four years in October, at down 0.5% from September and down 1.4% from the previous year. This news is likely to keep the ECB in a very easy money policy mode, as the central bank does not want deflation to set in.

Wyckoff’s Daily Risk Rating: 5.0 (A quieter day Tuesday, but the headline risk from major economic data released later this week will see risk aversion increase.)

(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), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are weaker in early U.S. trading and seeing some profit taking. The shorter-term moving averages (4-, 9- and 18-day) are 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,801.50 and then at the record high of 1,812.30. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,785.00 and then at 1,775.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are slightly lower early today on mild profit taking after hitting a 13-year high on Monday. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is located at Monday’s high of 3,501.25 and then at 3,515.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,465.00 and then at 3,450.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.5.

Dow futures: Prices are lower early today on profit taking. Buy stops likely reside just above technical resistance at 16,000 and then at Monday’s high of 16,080. Sell stops likely reside just below technical support at 15,900 and then at 15,850. 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 bearish early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are firmer early today on short covering. The bears have the overall near-term technical advantage as prices are in a choppy, five-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 3/32 and then at Monday’s high of 130 18/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 129 20/32 and then at 129 10/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are slightly higher early today. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 125.00.0 and then at Monday’s high of 125.10.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 124.23.5 and then at 124.18.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The March U.S. dollar index is lower early today. The greenback bears have the overall near-term technical advantage amid recent choppy trading. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.185 and then at 81.300. Shorter-term support is seen at Monday’s low of 80.710 and then at last week’s low of 80.675. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

January Nymex crude oil prices are firmer early today on more short covering after hitting a five-month low last week. Bears still have the overall near-term technical advantage. Prices are in a three-month-old downtrend on the daily bar chart. In January Nymex crude, look for buy stops to reside just above resistance at the overnight high of $94.25 and then at $95.00. Look for sell stops just below technical support at $93.50 and then at $93.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. Corn futures prices continue to drift lower on slack export demand for U.S. corn. Wheat futures prices hit a four-week high Monday but then backed off on the weak corn and soybean prices. But the technical posture in wheat has improved to the point that I am confident a market low is in place. The South American planting and growing season is off to a good start and that is bearish for corn and soybeans. As long as crude oil continues to trend lower, it will be hard for the grain futures markets to sustain an uptrend.

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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