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Jim Wyckoff's Morning Report: Russian Occupation of Ukraine Still Concern

12 March 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The Russian troop occupation of Ukraine is still a serious concern among traders and investors at mid-week.

The Group of Seven nations is set to release a statement later Wednesday to reiterate its solidarity regarding opposing Russia’s invasion of Ukraine. It’s likely that the G-7 will soon impose official economic and diplomatic sanctions on Russia. A referendum from Crimean citizens on secession is scheduled for Sunday, and that could be the next flashpoint in the region. The Russian occupation of Crimea has been a bullish factor for the safe-haven gold market.

In other overnight news, industrial production in the European Union fell by 0.2% in January, from December, and was up 2.1% year-on-year. The decline in EU output was unexpected and could have an influence on the European Central Bank’s monetary policy. The ECB has been battling tepid EU economic growth and deflationary concerns with a very stimulative monetary policy.

While the raw commodity sector has fared well in the first quarter of 2014, the copper market has seen its price fall dramatically the past week. Comex copper futures prices hit a nearly four-year low Wednesday. Part of the selling pressure on copper comes from concerns about weakening Chinese economic growth.

Crude oil prices have also been pressured in part by the concerns about a weakening Chinese economy. China is the world’s largest copper consumer. Copper is a major industrial metal worldwide. And many veteran stock market watchers say copper’s price move can be a harbinger of price action in the U.S. stock market. Concern about the health of the Chinese economy has weighed down the Asian and European stock markets this week.

U.S. economic data due for release Wednesday is again light and includes the weekly MBA mortgage applications survey, the monthly budget statement, and the weekly DOE liquid energy stocks report.

Wyckoff’s Daily Risk Rating: 7.0 (The Ukraine situation remains a significant geopolitical risk in the market place.)

(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 today, on profit taking. The bulls still 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 bearish early today.

Today, shorter-term technical resistance comes in at the overnight high of 1,866.00 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 1,840.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are lower early today on profit taking. 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 bearish early today. Shorter-term technical resistance is located at the overnight high of 3,691.25 and then at 3,700.00.

Buy stops likely reside just above those levels. On the downside, short-term support is seen at 3,665.00 and then at 3,650.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 4.0.

Dow futures: Prices are weaker in early U.S. trading, on profit taking. Buy stops likely reside just above technical resistance at 16,336 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 still 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: 4.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today on short covering. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average.

Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 131 28/32 and then at 132 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 131 11/32 and then at 131 even. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

June U.S. T-Notes: Prices are firmer early today on short covering. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today.

Shorter-term resistance lies at 124.00.0 and then at 124.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 123.22.0 and then at 123.16.0. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The June U.S. dollar index is slightly higher early on more tepid short covering in a bear market. Prices are in a six-week-old downtrend on the daily bar chart. Bears are still in technical command. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 80.060 and then at 80.200. Shorter-term support is seen at this week’s low of 79.780 and then at the contract low of 79.590. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

April Nymex crude oil prices are solidly lower and hit a five-week low early today. The bears have downside near-term technical momentum. In April Nymex crude, look for buy stops to reside just above resistance at $99.00 and then at the overnight high of $99.60. Look for sell stops just below technical support at $98.00 and then at $97.50. Wyckoff's Intra-Day Market Rating: 4.0

GRAINS

Markets were mixed but mostly weaker overnight, with soybeans sharply lower. More profit taking and downside technical corrections are featured today following recent gains. The grain market bulls still have the overall near-term technical advantage, but the soybean bulls are fading and need to show fresh power soon. Focus is on export demand for U.S. grains, and is also turning to the upcoming 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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