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Jim Wyckoff's Morning Report: Markets Slightly Higher Overnight

16 January 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The feature of the market place this week is the U.S. stock indexes that have either hit or are moving in on new record or multi-year highs.

Some mostly upbeat U.S. economic data this week has cheered the stock market bulls. The bullish ways of the U.S. and other world stock markets are working against many other competing asset classes, including raw commodities. Until the air starts to come out of the in-my-opinion presently overly inflated stock market balloon, raw commodities will continue to languish at best. Also, it’s important to remember that major bull runs in markets tend to be stronger and last longer than most market participants ever expect. The same is true with bear markets.

In overnight news, China’s so-called beige book quarterly survey of banks and businesses showed loans to consumers and businesses were hard to come by and that many loans were made to extend current loans. “Credit transmission is broken,” concluded the survey. While the Chinese economy continues to chug along at a healthy clip, the credit situation in China could become very problematic in a hurry. With the world economies and financial systems now being so closely inter-connected, any serious credit problems in China could quickly become a worldwide contagion.

It was also reported Thursday that the Euro zone’s consumer inflation rate was up 0.3% in November from October and were up 0.8% on the year. These figures are well below the 2.0% inflation rate the European Central Bank has targeted as being optimal. Still, German Bundesbank President Jens Weidmann said Thursday he sees only a slight chance for deflationary pressures to envelop the European Union.

U.S. economic data due out Thursday includes the weekly jobless claims report, real earnings, the consumer price index, the Philadelphia Fed business survey, the NAHB housing market index, and Treasury international capital flow data.

Wyckoff’s Daily Risk Rating: 6.0 (There is a decent slate of U.S. economic data Wednesday, which could move markets.)

(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 slightly lower in early U.S. trading, on mild profit taking from recent gains. Prices are hovering near the record high. Bulls are in firm overall technical command. 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 neutral early today. Today, shorter-term technical resistance comes in at the record high of 1,846.50 and then at 1,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 1,831.70 and then at 1,817.50. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are near steady early today as bulls are in command. Prices Wednesday hit a 14-year high.
The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is located at Wednesday’s high of 3,610.25 and then at 3,625.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Wednesday’s low of 3,570.75 and then at 3,550.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are near steady in early U.S. trading. Bulls are in technical control. Buy stops likely reside just above technical resistance at Wednesday’s high of 16,445 and then at 16,500. Sell stops likely reside just below technical support at 16,350 and then at Wednesday’s low of 16,325. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral early today. Wyckoff's Intra-Day Market Rating: 5.0

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are near steady early today. The bears still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Wednesday’s high of 130 25/32 and then at 131 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130 7/32 and then at this week’s low of 130 3/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

March U.S. T-Notes: Prices are slightly higher early today. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at Wednesday’s high of 124.08.5 and then at 124.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.27.5 and then at this week’s low of 123.24.0. 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 near steady early today. Bulls on Wednesday regained upside near-term technical momentum. Slow stochastics for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 81.205 and then at last week’s high of 81.335. Shorter-term support is seen at the overnight low of 81.045 and then at Wednesday’s low of 80.750. Wyckoff's Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

February Nymex crude oil prices are firmer early today and hit a two-week high on more short covering. Bulls have gained some upside near-term technical momentum this week. Bears do still have the overall near-term technical advantage. In February Nymex crude, look for buy stops to reside just above resistance at the overnight high of $94.64 and then at $95.00. Look for sell stops just below technical support at the overnight low of $93.86 and then at $93.38. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were slightly higher overnight. Fresh export news arrives Thursday morning with the weekly USDA export sales report. Soybean bulls have gained upside technical momentum this week. Corn bulls are trying holding their ground but need to show fresh power soon. Wheat bears remain in full technical command. Corn and soybean traders continue to keep an eye on South American weather, which is now heating up a bit and may become a bullish market factor in the coming days.

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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