Jim's Morning Markets Report--Jan. 29

January 29, 2014 12:46 AM
 

Wednesday, January 29--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

The major overnight news comes from Turkey, as its central
bank raised its key lending rate sharply, up to 12%, to try
to stave off the deflating Turkish lira. It remains to be
seen if the move by Turkey’s central bank will calm the
still-anxious emerging currency markets. India’s central
bank also raised its interest rates this week. So far
Wednesday morning, the move by Turkey’s central bank has
somewhat calmed the emerging markets. But that sentiment
could change quickly.

World stock and financial markets have stabilized at mid-
week amid the worries about some non-major world currencies
being stressed. Recent weaker Chinese economic data and
concern about the U.S. Federal Reserve reeling in its very
easy monetary policy are credited with pressuring several
secondary world currencies in recent trading sessions. The
main fear is the potential for a lack of financial market
liquidity in the emerging nations, if the world’s major
central banks start to turn off their easy-money spigots
that have allowed the world markets to be awash in cash the
past five years.

The big economic data point for this week comes Wednesday
afternoon when the Federal Reserve’s Open Market Committee
(FOMC) statement on its monetary policy is released. There
is a general belief, albeit not a clear consensus, that the
Fed will do another $10 billion tapering of its monthly
bond-buying program, also called quantitative easing. A CNBC
survey of 45 economists released Tuesday saw the vast
majority expecting the Fed to continue to taper its monetary
policy. At this week’s FOMC meeting Fed Chairman Ben
Bernanke also hands over to Janet Yellen the reins of the
U.S. central bank.

For the raw commodity market bulls, including the precious
metals bulls, their fate still lies with the health of the
U.S. and world stock markets. If the heretofore high-flying
world stock indexes continue to show weakness, as has been
the case just recently, then money flows will move from
equities to the "hard assets" that include raw commodities.

The Chinese Lunar New Year holiday is approaching later this
week, whereby the world’s largest nation and second-largest
economy mostly shuts down for several days. Most Asian
markets could see subdued trading action during the Chinese
holiday.

U.S. economic data due for release Wednesday includes the
MBA mortgage applications survey, the weekly DOE energy
stocks report and the FOMC statement.

Wyckoff’s Daily Risk Rating: 7.0 (The markets could show an
immediate, significant reaction to the afternoon release of
the FOMC statement.)

(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 near steady in early U.S.
trading. Bulls have faded 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. The 9-day is below
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 overnight
high of 1,801.30 and then at 1,810.00. Buy stops likely
reside just above those levels. Downside support for active
traders today is located at the overnight low of 1,784.00
and then at Tuesday’s low of 1,775.00. 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 short
covering. Bears still have some downside momentum on their
side. The shorter-term moving averages (4- 9-and 18-day) are
neutral early today. The 4-day moving average is below 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
the overnight high of 3,529.00 and then at this week’s high
of 3,545.00. Buy stops likely reside just above those
levels. On the downside, short-term support is seen at the
overnight low of 3,498.00 and then at 3,475.00. Sell stops
are likely located just below those levels. Wyckoff's Intra-
Day Market Rating: 5.5.

Dow futures: Prices are slightly lower in early U.S.
trading. Bulls have faded to suggest a major market top is
in place. Buy stops likely reside just above technical
resistance at Tuesday’s high of 15,880 and then at 15,900.
Sell stops likely reside just below technical support at
Tuesday’s low of 15,800 and then at 15,750. 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 early today. Wyckoff's
Intra-Day Market Rating: 4.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are weaker early today on more
profit taking and chart consolidation after hitting a three-
month high on Monday. The bulls still have some 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 bearish
early today. Shorter-term resistance lies at Tuesday’s high
of 132 22/32 and then at 133 even. Buy stops likely reside
just above those levels. Shorter-term technical support lies
at 132 even and then at 131 20/32. Sell stops likely reside
just below those levels. Wyckoff's Intra-Day Market Rating:
4.5
 
March U.S. T-Notes: Prices are weaker on more profit taking
and chart consolidation. 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 Tuesday’s high
of 125.04.0 and then at this week’s high of 125.09.5. Buy
stops likely reside just above those levels. Shorter-term
technical support lies at the overnight low of 124.23.0 and
then at the 124.16.0. 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 on more
short covering. Slow stochastics for the dollar index are
bullish early today. The dollar index finds shorter-term
technical resistance at Tuesday’s high of 80.845 and then at
81.000. Shorter-term support is seen at the overnight low of
80.595 and then at this week’s low of 80.390. Wyckoff's
Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are near steady early today.
Bulls still have upside near-term technical momentum. In
March Nymex crude, look for buy stops to reside just above
resistance at last week’s high of $97.84 and then at $98.00.
Look for sell stops just below technical support at the
overnight low of $96.78 and then at $96.00. Wyckoff's Intra-
Day Market Rating: 5.0

GRAINS

Markets were narrowly mixed overnight. There is not much new
in the grains this week. U.S. corn, soybeans and wheat all
need shots of fresh world export demand. Technically,
soybean bulls and bears are on a level playing field. Corn
and wheat market bears are 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. Grains could get some fresh
speculative funds flowing in, if the U.S. stock indexes
continue to trend lower.
 

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