Jim's Morning Markets Report--March 7

March 7, 2014 12:50 AM
 

Friday, March 7--Jim Wyckoff's Morning Web Log

* LATEST MARKET DEVELOPMENTS *

Overnight trade in European and Asian markets was more
subdued ahead of the big economic data point of the week:
the U.S. employment report on Friday morning. The forecast
is for the key non-farm payrolls figure of the jobs data to
come in at up 150,000 in February. Any reading that deviates
significantly from that forecast is likely to move the
markets. In recent weeks, U.S. economic data has mostly
missed the pre-report forecasts and have been on the weak
side of those forecasts. There are many in the market place
that think Friday’s jobs report will miss the forecast non-
farms number to the downside.

A feature in the market place late this week is the surge in
the Euro currency against the U.S. dollar. The Euro is at a
2.5 year high versus the greenback. The U.S. dollar index is
at a 4.5-month low. These currency moves have been a bullish
underlying factor for gold and other raw commodity markets
that are priced in U.S. dollars.

The situation in Ukraine has for now changed from a serious
geopolitical matter to more of a regional issue of lesser
significance—from a market place perspective.  However,
there is a move among Crimea citizens to have a referendum
to have their region annexed by Russia. The Ukraine
parliament, the European Union and the U.S. say they will
not recognize any a vote on the matter. A vote on the issue
is scheduled for March 16, and that could be the next
flashpoint in the region.

Reports overnight said a major Chinese solar equipment maker
defaulted on a corporate bond payment—the first time such
has occurred from a Chinese company. Most would have thought
the Chinese government would have stepped in to rescue the
ailing domestic business. Others suggest the Chinese
government is working on weeding out ailing businesses and
employing more capitalist principles, including letting weak
businesses fail. The corporate bond default has raised
concerns about the overall health of the Chinese economy.

In other overnight news, German industrial output rose 0.8%
in January, month-on-month, it was reported Friday. That
figure was slightly higher than market expectations. The
European Union’s largest economy is off to a good start in
2014.

Other U.S. economic data due for release Friday includes the
international trade report and consumer installment credit.

Wyckoff’s Daily Risk Rating: 6.0 (The Ukraine situation has
de-escalated—for now.)

(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 higher in early U.S.
trading today and hovering near Thursday’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 early today. Today, shorter-term technical
resistance comes in at Thursday’s record high of 1,880.80
and then at 1,890.00. Buy stops likely reside just above
those levels. Downside support for active traders today is
located at Thursday’s low of 1,871.40 and then at 1,860.00.
Sell stops are likely located just below those levels.
Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher early today
and hovering near Thursday’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 early today.
Shorter-term technical resistance is located at Thursday’s
high of 3,737.25 and then at 3,750.00. Buy stops likely
reside just above those levels. On the downside, short-term
support is seen at the overnight low of 3,718.25 and then at
3,700.00. Sell stops are likely located just below those
levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are slightly higher in early U.S.
trading and hovering near a six-week high. Bulls have the
overall near-term technical advantage. Buy stops likely
reside just above technical resistance at this week’s high
of 16,435 and then at 16,500. Sell stops likely reside just
below technical support at Thursday’s low of 16,392 and then
at 16,330. 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:
5.5

U.S. TREASURY BONDS AND NOTES

June U.S. T-Bonds: Prices are firmer early today on short
covering. Bulls have faded amid the increase in investor
risk appetite this week. Bulls still have the slight overall
near-term technical advantage. Shorter-term moving averages
(4- 9- 18-day) are neutral early today. The 4-day moving
average is below 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 the overnight high of 132 even and then at Thursday’s
high of 132 13/32. Buy stops likely reside just above those
levels. Shorter-term technical support lies at the overnight
low of 131 21/32 and then at 131 16/32. 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. The bulls have faded this week. 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 bearish early today. Shorter-term
resistance lies at 124.08.0 and then at 126.14.5. Buy stops
likely reside just above those levels. Shorter-term
technical support lies at 124.00.0 and then at this week’s
low of 123.28.5. 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 lower early today and hit a
fresh contract low overnight. Prices are in a five-week-old
downtrend on the daily bar chart. Bears are in firm command.
Slow stochastics for the dollar index are bearish early
today. The dollar index finds shorter-term technical
resistance at the overnight high of 79.835 and then at
80.000. Shorter-term support is seen at the overnight
contract low of 79.590 and then at 79.750. Wyckoff's Intra
Day Market Rating: 3.0

NYMEX CRUDE OIL

April Nymex crude oil prices are modestly higher early today
on a corrective bounce after hitting a three-week low on
Thursday. Bulls still have the overall near-term technical
advantage but have faded to suggest a market top is now in
place. A two-month-old uptrend on the daily bar chart has
been negated. In April Nymex crude, look for buy stops to
reside just above resistance at $102.50 and then at $103.00.
Look for sell stops just below technical support at the
overnight low of $101.57 and then at $101.00. Wyckoff's
Intra-Day Market Rating: 5.5

GRAINS

Markets were solidly higher overnight. Strong export demand
for U.S. grains recently is a bullish factor for these
markets. A slumping U.S. dollar index this week is also
bullish for the grains. Traders are awaiting Monday’s
monthly USDA supply and demand report. The grain market
bulls have near-term technical momentum on their side, to
suggest prices can work sideways or sideways to higher.
Focus will soon turn to the U.S. planting season and any
potential planting delays due to cold weather in the central
U.S.
 

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