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Jim Wyckoff's Morning Report: Risk in Markets Amid Ukraine Unrest

04 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - It appears the situation regarding the Russian military invasion of Crimea and the civil unrest in Ukraine has de-escalated just a bit Tuesday, which has put some risk appetite back into the world market place.

The U.S. dollar, U.S. Treasuries, gold and crude oil have all backed down Tuesday from their rallies Monday, while the U.S. stock indexes are rallying Tuesday morning, after selling pressure Monday. Russian stock and financial markets were also reportedly stabilizing Tuesday. This is likely due to reports Russian President Vladimir Putin has halted his military exercises near the Ukrainian border and ordered troops there back to their bases. However, Russian troops are still on the ground in the Crimea region of Ukraine and this situation is still fluid and could escalate quickly. And the matter of Ukraine being in civil disarray and near financial collapse has not changed the past 24 hours.

The U.S. is already taking action on economic and diplomatic sanctions against Russia. Economic sanctions levied against an already unstable Russian economy would have major ramifications for Russia and those world companies that deal with Russia. Ukraine and the Black Sea region are rich in natural resources and the Black Sea is a major export hub. Any military conflict in the region would very likely disrupt shipping of any commodity coming out of the Black Sea.

In other news overnight, producer prices in the European Union fell 0.3% in January, and were down 1.3% year-on-year. That’s the largest year-on-year drop in producer prices in the Euro zone in over four years. The report underscores there should still be concern in the market place about deflationary price pressures in the European Union.

U.S. economic data due for Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the ISM New York report on business, and the IBD/TIPP economic optimism index. The big economic news of the week will be the European Central Bank’s monthly monetary policy meeting on Thursday and the U.S. monthly employment report on Friday.

Wyckoff’s Daily Risk Rating: 6.0 (The Russian military invasion of Crimea and the Ukraine unrest have de-escalated a bit.)

(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 solidly higher in early U.S. trading today, and right back near last week’s record high. The bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the record high of 1,866.20 and then at 1,875.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 1,850.00 and then at the overnight low of 1,843.90. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 7.0

Nasdaq index futures: Prices are sharply higher early today and near last week’s 13.5-year high. The shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-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 last week’s high of 3,722.50 and then at 3,735.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,700.00 and then at 3,685.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 7.0.

Dow futures: Prices are sharply higher in early U.S. trading. Bulls have the overall near-term technical advantage. Buy stops likely reside just above technical resistance at last week’s high of 16,385 and then at 16,400. Sell stops likely reside just below technical support at 16,300 and then at 16,250. 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: 7.0

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are lower early today on profit taking after hitting an eight-month high Monday. Bulls still have the near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at 135 even and then at the overnight high of 135 8/32. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 134 15/32 and then at 134 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

June U.S. T-Notes: Prices are lower early today on profit taking after hitting a four-month high Monday. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 126.18.5 and then at Monday’s high of 126.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 126.01.5 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 4.0

U.S. DOLLAR INDEX

The June U.S. dollar index is lower early today. Prices are in a five-week-old downtrend on the daily bar chart. Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 80.175 and then at 80.250. Shorter-term support is seen at the overnight low of 79.955 and then at Monday’s low of 79.780. Wyckoff's Intra Day Market Rating: 4.0

NYMEX CRUDE OIL

April Nymex crude oil prices are lower early today on profit taking after hitting a contract high on Monday. Bulls still have the overall near-term technical momentum. A steep two-month-old uptrend is still in place on the daily bar chart. In April Nymex crude, look for buy stops to reside just above resistance at $104.00 and then at the overnight high of $104.96. Look for sell stops just below technical support at the overnight low of $103.30 and then at $103.00. Wyckoff's Intra-Day Market Rating: 4.0

GRAINS

Markets were mixed overnight. The Ukraine/Russia crisis is still impacting the grain markets. However, the bullish implications of that matter have likely played out—unless there is serious military conflict in the Black Sea region, which would impact grain exports there. The grain market bulls still have some near-term technical momentum on their side, to suggest major market lows are in place and that prices can work sideways or sideways to higher the rest of this year. Focus will soon turn to the U.S. planting season and any potential planting delays due to cold weather in the central U.S.

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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