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RSS By: Jim Wyckoff, Pro Farmer

Pro Farmer technical analyst Jim Wyckoff's daily thoughts.

JIm's Morning Markets Report--August 14

Aug 14, 2012

Tuesday, August 14--Jim Wyckoff's Morning Web Log

Note: I am out of the office today, attending my nephew’s funeral. My friend and fellow
analyst/trader Ken Seehusen is producing my morning report. Ken's style is a bit different
than mine, but I think you'll also benefit from Ken's work.--Jim

The STOCK INDEXES

The September NASDAQ 100 was higher overnight as it extends the rally off
June’s low. Stochastics and the RSI are overbought but remain neutral to
bullish signaling that sideways to higher prices are possible near-term. If
September extends the rally off July’s low, May’s high crossing at 2742.50
is the next upside target. Closes below the 20-day moving average crossing
at 2648.07 would confirm that a short-term top has been posted. First
resistance is May’s high crossing at 2742.50. Second resistance is April’s
high crossing at 2788.00. First support is the 10-day moving average
crossing at 2691.80. Second support is the 20-day moving average crossing at
2648.07.

The September S&P 500 index was higher overnight as it advances ahead of
this morning’s retail sales, which is expected to show an increase following
a three-month slump. Stochastics and the RSI are overbought but remain
neutral to bullish signaling that sideways to higher prices are possible
near-term. If September extends the rally off June’s low, March’s high
crossing at 1408.90 is the next upside target. Closes below the 20-day
moving average crossing at 1375.77 would confirm that a short-term top has
been posted. First resistance is the overnight high crossing at 1407.60.
Second resistance is March’s high crossing at 1408.90. First support is the
10-day moving average crossing at 1391.75. Second support is the 20-day
moving average crossing at 1375.77.

INTEREST RATES

September T-bonds were lower overnight due to strength in the equity
markets. Stochastics and the RSI are oversold and are turning bullish
hinting that a low might be in or is near. Closes above the 20-day moving
average crossing at 150-14 are needed to confirm that a short-term low has
been posted. If September renews the decline off July’s high, the 38%
retracement level of the March-July rally crossing at 146-02 is the next
downside target. First resistance is the 10-day moving average crossing at
149-09. Second resistance is the 20-day moving average crossing at 150-14.
First support is the 38% retracement level of the March-July rally crossing
at 146-02. Second support is the 50% retracement level of the March-July
rally crossing at 143-26.

ENERGY MARKETS

September crude oil was higher overnight on speculation that inventories
declined for a third week in the U.S., the world’s biggest crude consumer.
Today’s inventory report is forecasted to show that U.S. crude stockpiles
fell last week as refiners operated near the highest rates in five years.
Despite overnight gains, September remains below the 50% retracement level
of this year’s decline crossing at 94.28. Stochastics and the RSI are
diverging and are turning bearish hinting that a short-term top might be in
or is near. Closes below the 20-day moving average crossing at 90.83 would
confirm that a short-term top has been posted while opening the door for
additional weakness during the first half of August. If September resumes
the rally off June’s low, the 62% retracement level of this year’s decline
crossing at 98.20 is the next upside target. First resistance is the 50%
retracement level of this year’s decline crossing at 94.41. Second
resistance is the 62% retracement level of this year’s decline crossing at
98.42. First support is the 20-day moving average crossing at 90.83. Second
support is the reaction low crossing at 86.92.

CURRENCIES

The September Dollar was lower overnight but remains above the 38%
retracement level of the April-July rally crossing at 82.25. Stochastics and
the RSI are oversold and are turning neutral to bullish signaling that a low
might be in or is near. Closes above the 20-day moving average crossing at
82.94 are needed to confirm that a short-term low has been posted. If
September renews the decline off July’s high, the 50% retracement level of
the April-July rally crossing at 81.64 is the next downside target. First
resistance is the 20-day moving average crossing at 82.94. Second resistance
is the reaction high crossing at 83.61. First support is last Tuesday’s low
crossing at 82.06. Second support is the 50% retracement level of the
April-July rally crossing at 81.64.

GRAINS

December corn was higher due to short covering overnight as it consolidates
some of the decline off last Friday’s high. Monday’s crop conditions report
showed that crop conditions appear to have stabilized this past week.
However, the poor to very poor categories saw a 1% increase to 51% for this
years crop. The good to excellent categories stayed the same at 23%.
Exporters shipped 22.3 million bushels of corn in the week ending August 9,
up from 20.4 million the previous week, but below the five-year average for
the week of 41.2 million. The USDA reported marketing year shipments total
1.452 billion bushels, down 256 million or 15% from the previous year.
Shipments to date exceed the seasonal pace needed to reach USDA's export
target by 65 million bushels but the gap is shrinking as we near the end of
the marketing year. The USDA also reported 7.6 million bushels headed for
China. The high-range close sets the stage for a steady to higher opening
when the day session begins trading. Stochastics and the RSI have turned
bearish signaling that sideways to lower prices are possible near-term.
Monday’s close below the 20-day moving average crossing at 7.97 1/2 confirms
that a short-term top has been posted. The door is open for additional
profit taking near-term. Closes below the reaction low crossing at 7.45 1/2
would greatly increase the odds that a pre-harvest top has been posted. If
December extends this summer’s rally into uncharted territory, the July 5th
measuring gap projects a potential rally to the 8.54 1/2 area. First
resistance is last Friday’s high crossing at 8.49. Second resistance is the
July 5th measuring gap projection of a potential rally to the 8.54 1/2 area.
First support is Monday’s low crossing at 7.86. Second support is the
reaction low crossing at 7.45 1/2.

December wheat was higher due to short covering overnight as it consolidates
some of the decline off last Friday’s high. December continues to extend the
trading range of the past four weeks. The high-range close sets the stage
for a steady to higher opening when the day session begins trading.
Stochastics and the RSI are turning bearish signaling that sideways to lower
prices are possible near-term. The US shipped 22.2 million bushels of wheat
in the week ending August 9, which was up from 21.2 million the previous
week, but below the five-year average for the week of 26.8 million.
Marketing year shipments total 190 million bushels, which is down 43 million
or 19% from the previous year. Shipments to date fall short of the seasonal
pace needed to reach USDA's export target by May 31 by 40 million bushels
and the deficit is growing. Closes below the reaction low crossing at 8.64
1/4 would confirm that a short-term top has been posted while opening the
door for additional weakness near-term. If December renews the rally off
June’s low, the May-2011 high crossing at 9.77 1/2 is the next upside
target. First resistance is July’s high crossing at 9.53 1/4. Second
resistance is the May-2011 high crossing at 9.77 1/2. First support is the
reaction low crossing at 8.64 1/4. Second support is the reaction low
crossing at 8.16 1/4.

November soybeans were higher due to short covering overnight as it bounces
off June’s uptrend line crossing near 15.90 1/4. Stochastics and the RSI are
neutral to bullish signaling that sideways to higher prices are possible
near-term. Both domestic crush and export demand remain well above levels
needed to reach USDA's targets, which suggests that little rationing has
been done at this point in time. However, the market is currently locked in
a correction pattern off July’s high as it consolidates some of this summer’
s rally. This type of action is normal following the August supply-demand
report and leaves soybeans vulnerable to sideways to lower prices ahead of
fall harvest. The US exported 15.7 million bushels of soybeans in the week
ending August 9, which was up from 12.9 million the previous week and above
the five-year average for the week of 9.5 million. Marketing year shipments
total 1.311 billion bushels, down 151 million or 10% from the previous year.
Shipments to date exceed the seasonal pace needed to reach USDA's export
target by August 31 by 5 million bushels and the gap is growing. If November
renews last week’s rally, July’s high crossing at 16.91 1/2 then
psychological resistance crossing at 17.00 are the next upside targets.
Closes below the reaction low crossing at 15.36 would open the door for a
larger-degree decline into fall harvest. First resistance is July’s high
crossing at 16.91 1/2. Second resistance is psychological resistance
crossing at 17.00. First support is the reaction low crossing at 15.36.
Second support is the reaction low crossing at 15.05 1/4.

 

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