Jim's Morning Markets Report--Feb. 28

February 28, 2014 12:36 AM
 

Friday, February 28--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The Chinese currency, the yuan, fell sharply against the
U.S. dollar Friday—the steepest one-day decline in nine
years. The drop in the yuan helped to pressure gold prices
Friday. With gold priced in dollars on the world market, the
weaker Chinese currency makes it more expensive for Chinese
citizens to buy gold. China is the world’s largest consumer
of gold. It appears the Chinese government is manipulating
its yuan for world trade advantages and to punish currency
speculators trading the yuan.

Meantime, the Euro currency rose Friday following a European
Union inflation report that came in slightly higher than
expected. Consumer prices in the EU rose 0.8%, year-on-year,
in February. That reading still does not match the European
Central Bank’s inflation target of 2.0% a year, however. The
ECB holds its monthly meeting next Thursday.

The crisis in Ukraine is still a worry to the market place.
Gunmen have reportedly taken control of two airports in
Crimea. The country is on the verge of financial collapse
and needs funding soon from outside sources. It does appear
the International Monetary Fund is moving quickly to provide
funding to the Ukrainian financial system. If this situation
escalates it would put even more risk aversion into the
world market place, which would likely be bullish for gold
and U.S. Treasuries and bearish for equities.

U.S. economic data due for release Friday includes the gross
domestic product report, the ISM Chicago business survey,
pending home sales, and the University of Michigan consumer
sentiment survey.

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine uncertainty is
keeping some risk aversion in the market place heading into
the weekend.)

(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 today, on mild profit taking. Prices are hovering
not far below this 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
bearish early today. Today, shorter-term technical
resistance comes in at the record high of 1,856.50 and then
at 1,865.00. Buy stops likely reside just above those
levels. Downside support for active traders today is located
at this week’s low of 1,830.00 and then at 1,817.00. Sell
stops are likely located just below those levels. Wyckoff's
Intra-day Market Rating: 5.0

Nasdaq index futures: Prices are slightly lower early today
on mild profit taking. Prices are not far below this 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 to bearish early today. Shorter-term technical
resistance is located at this week’s high of 3,706.70 and
then at 3,720.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at
3,675.00 and then at this week’s low of 3,655.00. Sell stops
are likely located just below those levels. Wyckoff's Intra-
Day Market Rating: 4.5.

Dow futures: Prices are weaker in early U.S. trading on
profit taking. Bulls still have the overall near-term
technical advantage. Buy stops likely reside just above
technical resistance at this week’s high of 16,277 and then
at 16,300. Sell stops likely reside just below technical
support at 16,200 and then at Thursday’s low of 16,150.
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
early today. Wyckoff's Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are lower early today on profit
taking after hitting a four-week high overnight. Bulls still
have some upside technical momentum. 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 neutral early today. Shorter-term resistance lies at the
overnight high of 134 27/32 and then at the February high of
135 3/32. Buy stops likely reside just above those levels.
Shorter-term technical support lies at the overnight low of
134 5/32 and then at 134 even. Sell stops likely reside just
below those levels. Wyckoff's Intra-Day Market Rating: 4.5
 
March U.S. T-Notes: Prices are weaker early today on profit
taking after hitting a three-week high overnight. Bulls
still have some upside technical momentum. 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 neutral early today. Shorter-term
resistance lies at the overnight high of 126.13.5 and then
at the February high of 126.16.0. Buy stops likely reside
just above those levels. Shorter-term technical support
lies at the overnight low of 126.00.0 and then at 125.22.0.
Sell stops likely reside just below those levels. Wyckoff's
Intra-Day Market Rating: 4.5

U.S. DOLLAR INDEX

The March U.S. dollar index is solidly lower early today and
hit a two-month low overnight. Prices are in a four-week-old
downtrend on the daily bar chart. Slow stochastics for the
dollar index are neutral early today. The dollar index finds
shorter-term technical resistance at 80.000 and then at
80.150. Shorter-term support is seen at the overnight low of
79.830 and then at the December low of 79.500. Wyckoff's
Intra Day Market Rating: 3.0

NYMEX CRUDE OIL

April Nymex crude oil prices are near steady early today.
Bulls still have the overall near-term technical momentum.
This week’s pause is not bearish. A steep seven-week-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 $103.00 and then at this week’s high of
$103.45. Look for sell stops just below technical support at
the overnight low of $101.87 and then at $101.58. Wyckoff's
Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. The grain market
bulls are fading, technically, late this week. Lower price
closes on Friday would begin to signal near-term market tops
are in place for the grains. Focus will soon turn from South
American crop harvest and yields, to the U.S. planting
season and any potential planting delays.
 

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