Jim's Morning Markets Report--Feb. 4

February 4, 2014 12:55 AM
 

Tuesday, February 4--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The feature in overnight trading was a stock market sell-off
in Asia and Europe, led by Japan’s Nikkei stock index being
down over 4%. Some very weak U.S. manufacturing data Monday
pushed the U.S. stock indexes sharply lower, and world stock
markets followed overnight. U.S. stock indexes were stable
and pausing Tuesday morning.

Traders and investors worldwide are still jittery over the
situation with some emerging market currencies being in
turmoil—although those troubled smaller currencies were
generally on good behavior Tuesday. The past couple weeks
have seen investor risk appetite markedly decrease, and
that’s been bullish for gold and U.S. Treasuries, but
bearish for the equities markets.

Market watchers are wondering more and more early this year
if the very mature bull market runs in world equity markets
have finally run out of gas. Indeed, the month of January
was unkind to the U.S. stock index bulls. Also, the higher
daily price volatility at higher price levels in the U.S.
stock indexes early this year is a bearish technical warning
signal of a topping process playing out.

The recent spate of disappointing U.S. economic data now
puts even more importance on Friday’s monthly U.S. jobs
report for January. The early forecasts are for the key non-
farm payrolls figure of the employment report to come in at
up around 190,000 in January.

The Chinese Lunar New Year holiday has China on holiday
early this week. That is keeping Asian markets somewhat
subdued.

U.S. economic data due for release Tuesday includes the
weekly Goldman Sachs and Johnson Redbook retail sales
reports, the ISM New York report on business, manufacturers’
shipments and orders, and the IDB/TIPP economic optimism
index.

Wyckoff’s Daily Risk Rating: 6.5 (There is still some risk
aversion in the market place with the emerging market
currency and world stock market anxieties.)

(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 firmer in early U.S.
trading, on short covering after hitting a 3.5-month low on
Monday. Bears still have downside near-term technical
momentum. The shorter-term moving averages (4-, 9- and 18-
day) are bearish early today. The 4-day moving average is
below the 9-day. The 9-day is below the 18-day moving
average. Short-term oscillators (RSI, slow stochastics) are
neutral today. Today, shorter-term technical resistance
comes in at the overnight high of 1,743.30 and then at
1,750.00. Buy stops likely reside just above those levels.
Downside support for active traders today is located at
Monday’s low of 1,732.50 and then at 1,725.00. Sell stops
are likely located just below those levels. Wyckoff's Intra-
day Market Rating: 5.0

Nasdaq index futures: Prices are firmer early today on a
corrective bounce. Bulls have faded badly recently. The
shorter-term moving averages (4- 9-and 18-day) are bearish
early today. The 4-day moving average is below the 9-day and
18-day. The 9-day average is below the 18-day. Short-term
oscillators (RSI, slow stochastics) are neutral early today.
Shorter-term technical resistance is located at 3,450.00 and
then at 3,475.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at
Monday’s low of 3,425.25 and then at the December low of
3,415.25. Sell stops are likely located just below those
levels. Wyckoff's Intra-Day Market Rating: 5.0.

Dow futures: Prices are firmer in early U.S. trading, on a
corrective bounce after hitting a 3.5-month low on Monday.
Bears still have downside technical momentum. Buy stops
likely reside just above technical resistance at 15,350 and
then at 15,400. Sell stops likely reside just below
technical support at Monday’s low of 15,292 and then at
15,250. Shorter-term moving averages are bearish early
today, as the 4-day moving average is below the 9-day. The
9-day moving average is below 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

March U.S. T-Bonds: Prices are lower early today, on a
corrective pullback after hitting a 7.5-month high on
Monday. The bulls still have good upside near-term 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 to bearish
early today. Shorter-term resistance lies at Monday’s high
of 135 3/32 and then at 135 16/32. Buy stops likely reside
just above those levels. Shorter-term technical support lies
at 134 10/32 even 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 some
profit taking from recent strong gains that saw prices hit
a three-month high on Monday. Bulls still have 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 Monday’s high
of 126.16.0 and then at 126.24.0. Buy stops likely reside
just above those levels. Shorter-term technical support
lies at the overnight low of 126.06.5 and then at 125.00.0.
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 firmer early today. Slow
stochastics for the dollar index are neutral early today.
The dollar index finds shorter-term technical resistance at
the overnight high of 81.300 and then at last week’s high of
81.440. Shorter-term support is seen at the overnight low of
81.075 and then at 81.000. Wyckoff's Intra Day Market
Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are near steady early today.
Bulls still have some upside near-term technical momentum.
In March Nymex crude, look for buy stops to reside just
above resistance at $97.00 and then at $97.50. Look for sell
stops just below technical support at Monday’s low of $96.26
and then at $96.00. Wyckoff's Intra-Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. There is not much
fresh fundamental news in the markets and traders are
awaiting next week’s USDA supply and demand report.
Technically, soybean bulls and bears are on a level playing
field. Corn and wheat market bears remain in full command.
The demand side of the equation for grains will continue to
be a major market factor in the grain markets. South
American corn and soybean growing weather is deemed mostly
favorable and so far a non-issue for the markets.
Importantly, the risk aversion presently pervading the
market place is a bearish underlying factor for the grain
markets.
 

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