More Sour News for Raw Commodity Sector Thursday

* Latest Market Developments *

In overnight news, China’s consumer price index was reported up 2.0%, year-on-year, in August, versus up 2.3% in July. A rise of 2.2% was expected for August. That’s some good news for the beleaguered raw commodity sector, as it suggests China, the world’s largest raw commodity importer, won’t have to tighten its monetary policy to keep inflation in check.

In another sign of the present ill health of the raw commodity sector, the United Nations reported Thursday that world food prices fell to a four-year low in August. Crude oil and grains are leading a price slump in the raw commodity sector. Brent crude oil prices fell to a 16-month low overnight.

The surging U.S. dollar index is another bearish underlying factor for the raw commodity sector. The dollar index is at a 14-month high. Most major raw commodities are priced in U.S. dollars on the world markets. When the greenback appreciates against the other currencies, it makes commodities priced in dollars more expensive to purchase with those currencies.

On the geopolitics front, U.S. President Obama said Wednesday evening the U.S. military will use more air strikes against the ISIS terrorists, but will put no troops on the ground in the Middle East. That news was not unexpected and had little markets impact.Meantime, The Russia-Ukraine cease-fire is holding up. Reports Wednesday quoted the Ukrainian president as saying most Russian troops have now pulled away from the Russia-Ukraine border. Reports also said the new European Union sanctions on Russia will go into effect on Friday.

U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly Treasury budget statement. Traders and investors are already looking ahead to next week, and a more robust batch of economic data points, highlighted by the meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC). Next week is also the much-anticipated referendum on Scotland’s independence from the U.K.

Wyckoff’s Daily Risk Rating: 6.0 (The market place is now less focused on the tensions between Russia and Ukraine, and on other world hot spots. But it’s my bias this condition will not last and that geopolitics will have a bigger influence on markets in the coming weeks.)

(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 Wyckoff

U.S. STOCK INDEXES

S&P 500 December e-mini futures: Prices are weaker in early trading, on mild profit taking. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 1,987.25 and then at this week’s high of 1,998.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 1,973.75 and then at 1,960.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5

Nasdaq index futures: Prices are weaker in early trading today, on profit taking. Bulls are still in technical control. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-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 seen at 4,100.00 and then at this week’s 14-year high of 4,106.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 4,060.00 and then at this month’s low of 4,052.00. 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. Buy stops likely reside just above technical resistance at Wednesday’s high of 17,070 and then at 17,100. Sell stops likely reside just below technical support at 17,000 and then at Wednesday’s low of 16,970. Shorter-term moving averages are neutral early today, as the 4-day moving average is below the 9-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

December U.S. T-Bonds: Prices are firmer early today on short covering from recent selling pressure. Bulls still have the slight overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 137 19/32 and then at 138 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 137 2/32 even and then at 137 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5 December U.S. T-Notes: Prices are slightly higher in early trading, on tepid short covering. Bulls have the slight overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 124.21.5 and then at 125.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 124.12.0 and then at 124.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5

U.S. DOLLAR INDEX

The December U.S. dollar index is near steady in early trading and hovering near this week’s contract and 14-month high. Bulls still have the solid overall near-term technical advantage. Slow stochastics for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 84.495 and then at the contract high of 84.650. Shorter-term support is seen at Wednesday’s low of 84.200 and then at 84.000. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

October Nymex crude oil prices are lower and hit a seven-month low in early U.S. trading. Bears have the firm overall near-term technical advantage as prices are in an 11-week-old downtrend on the daily bar chart. Look for buy stops to reside just above resistance at $92.00 and then at $92.50. Look for sell stops just below technical support at the overnight low of $90.43 and then at $90.00. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Markets were mostly weaker in overnight trading. Traders are awaiting the monthly USDA supply and demand report, out this morning, which is expected to show record-large U.S. corn and soybean crops grown this year. Weekly USDA export sales data is also out today. It’s likely that frost will nip crops in the northern Corn Belt and wheat region in the next 48 hours.