What to expect from the markets this week, August 28, 2017
Market “Near Term” Snap Shot
Rice: Slight bullish bias remains
Cotton: Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given the current global economic setting
Soybeans: Bearish with a bottoming process underway
Corn: Bearish with a bottoming process underway
Wheat: Bearish with a bottoming process underway
10-year Treasury Yield: We enter the week with the 10 Year US Treasury Yield slightly bullish or lower yield or interest rate
S. Dollar: Corrective activity of the recent ongoing decline is underway, before likely resuming its downside move to 87 or lower
Oil $WTIC: Trading range $43 to $52 with this week’s prices more bearish than bullish
$CRB Commodity Index: Government, Central Bank, other intervention certainly creating market uncertainty. Do not rule out a revisit to previous index lows during this period of global consolidation. That said, this index is building a base to move higher
S&P 500: Consolidation underway, so allow price action to provide guidance
Global Equities: Cautionary period, but attempting to regain momentum
Feeder Cattle: Consolidating before moving higher
In addition to the following “Expanded near term market outlook considerations for week beginning Aug. 28, 2017”
Download slide show for charts and expanded details. Click download button at end of this file.
This Week’s Select Summary Considerations:
10-Year US Treasury Yield:
We enter the week with the 10 Year US Treasury Yield slightly bullish with a potentially lower yield
We enter the week with the 10 Year US Treasury Yield slightly bullish with a potentially lower yield
What could continue to move the yield lower? Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors could take the yield lower to 2 or below before a move higher
If the yield moved above 2.75 then some consideration would need to be given to a change in trend
S. Dollar Index:
Bearish - Breaking support at 92.56 opens the door for a likely decline to 87 or lower
Given global macro considerations coupled with no significant global anomaly event moving forward this index may have some serious weakness
Unless Middle East, North Korean, European, Venezuelan or other anomaly events start to dominate market participant decisions, then we are still in search of a low for the dollar
CRB Index:
The question in search of an answer: What is the near term impact of Government and Central Bank intervention globally on economic activity? Do not rule out a revisit to previous index lows during this period of global consolidation. That said, this index is building a base to move higher
Caution is advised since global economic, social, political and military uncertainties remain problematic
Between Fed off-again and on-again accommodation and/or misdirectional verbal guidance, building uncertainties surrounding fiscal, trade and regulatory policy stimulative activities, the $CRB Commodity Index: a key economic indicator, has struggled
$WTIC Light Crude Oil:
Trading range $43 to $52 with this week’s prices more bearish than bullish
A complex, volatile and an uncertain market that deserves a great deal of respect in a world with building economic, social, political and homeland security uncertainties
North Korea, market structure, geopolitical considerations and building possibilities of a Venezuelan civil war are just some of the supportive factors
Soybeans:
Assume bearish until price action proves otherwise
Soybeans enter the week with potential upside price expectations, so is the price move corrective followed by prices resuming their move to the downside or is a bottoming process underway?
Given complex global macro challenges assume until price action proves otherwise that the bottoming process has not yet completed, and a retest of the $9.00 area or potentially lower into the $8.35 area is still a possibility
Corn:
Assume bearish until price action becomes more supportive of the bullish case and give consideration to prices moving to their previous 2016 lows of $3.15 or below
Long Grain Rice:
Interestingly the bullish bias remains, but potentially near term uncertain global economic crosscurrents related to currencies, bonds, equities and commodities are rebalancing markets
Cotton:
Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given current global economic uncertainties
Wheat:
Consideration now has to be given to prices returning to their 2016 low of $3.90 or lower
SPY SPDR S&P 500 ETF:
A cautionary time period as gains consolidate
Allow price action to provide guidance
QQQ NASDAQ Power Shares:
Near term remain cautious of this index
Allow price action to provide guidance
EFA iShares ETF - Global Equities Excluding U.S. and Canada:
A cautionary time period
Attempting to regain momentum
Allow price action to provide guidance
EEM iShares ETF, Emerging Market Equities:
A cautionary time period, but regaining momentum
Allow price action to provide guidance
Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected].
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