How To Stay Where The Action Is
Sticking with the biggest momentum movers — either up or
down –Â is the name of the game. And one very effective way to do
this played again today and that is by following the momentum of futures contracts on
either the Implosion-5
or Momentum-5 lists.
(Note: In recent days, pigs have been the leaders on the Momentum-5 lists and
have made explosive gains. Today we’re focusing on the downside in one of the
futures markets biggest movers).Â
The past four days’ leader of the Implosion-5 List,
unleaded gasoline
(
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PowerRating), moved radically lower to tag a contract
low. And combining signals seemed to give this market additional downside
propulsion, as unleaded accelerated out of its Pullback From Lows
setup. The big move down in unleaded gasoline
also coincided with a measured move out of the contract’s bigger-picture head-and-shoulders top as it descended .0548 to .7220. Now that unleaded
has completed its measured move, look for a rebound and a potential test of the
overhead neckline back around .8400 (basis August). In the final moments
of trading, unleaded gasoline also left an intraday pattern suggestive of a
reversal (notice how it strongly resembles a Turtle Soup Plus One, which we use
on the daily charts).Â
Gasoline and oil
inventories have risen
more quickly than expected: Yesterday’s API showed that gasoline inventories rose for
the 10th consecutive month, providing the fundamental boost for today’s plunge
in the energies. Just prior to the Memorial Day spike, I pointed out in this
space how retailers had already exhibited signs of stockpiling unleaded gasoline
to avert the shortages of reformulated grades that occurred in the 2000 driving
season. The lack of demand from retail gasoline stations has exacerbated
unleaded’s plunge.Â
August crude oil
(
CLQ1 |
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PowerRating)
is also lower out of its Pullback From Lows
setup following the API’s build up in inventories, but still may need to test
basis August’s January low before rebounding to test today’s overhead gap.Â
Also from the Implosion-5 List
in the energies, natural gas
(
NGN1 |
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PowerRating)
continues to implode. Its fractal head-and-shoulders top implies a measured move
down to 3.000, using traditional measuring analysis.Â
July Federal Funds
futures
(
FFN1 |
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PowerRating) plunged after the monetary-policy-making body of the Federal
Reserve announced its decision to cut interest rates by .25%. The market had
been pricing in approximately 50/50 odds of a .50% cut and tumbled to account
for the lesser-than-priced-in easing action. September T-bonds
(
USU1 |
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PowerRating)
rallied initially, then pulled back form highs to close just 6/32 higher at 101
30/32.
The
British pound
(
BPU1 |
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PowerRating) today basically recovered all of the losses sustained
during the Blair election landslide and from fear that Britain will quickly adopt the
single-currency euro. Today’s megaphoning bar depicts indecision and perhaps
pessimism about recent heady gains. The pound closed .0008 higher at 1.4114.
Japanese yen
(
JYU1 |
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PowerRating) logged another volatility compressing,
small-range day after gapping down. This futures contract triggered today out of a Pullback From Lows
setup and closed near a two-month low, down .0038 at .8110. Ominous.Â
Orange
juice
(
OJU1 |
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Chart |
News |
PowerRating) triggered out of its Pullback From Lows
setup and plunged to contract lows. At the low, the contract reversed in a same-day Turtle Soup.
This sets up a Turtle Soup Plus One Buy for tomorrow with the 6/13 gap looming
overhead at 82.