Lessons For Capturing Explosions

• May 21, 2001
• Marc Dupee

Nasdaq 100 futures
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consolidation range on the strength of Internets, biotechs and semiconductors.
The Nasdaq futures hinted they could make a larger-than-normal move by posting
on the Multiple Days Low
Volatility List. Today’s expansion bar took the contract to a
two-month high and left the NDM1 up 118.00 at 2052.00.
S&P futures
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Dow futures
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Today’s powerful surge in index futures gained steam in the afternoon. The
Nasdaq futures bounced off the bottom end of a cluster nailed by Carolyn Boroden
in her intraday Price
Action Levels Trading Subscriptions service. See her lessons in the
Futures Education section for entry-strategy lessons against the calculated
Fibonacci cluster levels. 

August feeder cattle

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PowerRating), after hitting a two-month high three days ago, rallied again. Notice that feeders’ action three days ago
was telling. The gap-up action and
finish on its high is one of the strongest things that a market can do. The
action was reflected by leaving a tail, where the contract started on its high,
tested lower, than rallied to finish on the high. The following day’s lap-up
opening and today’s gap-up opening to its highest level of the year is very
bullish as well. Today, feeders made good on an Off The Blocks
entry out of its
New 10-Day Highs indication. You can learn how to trade this setup in the
the Futures Education section. Feeders closed up almost their daily limit,
+1.425 at 90.950 on lower supply and lower weights of livestock. 

Unleaded gasoline
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rallied for a third day after pulling back to Fibonacci retracements of prior
swing lows (38% and 50%) at its 50-day moving average. The strong action three
days ago left a tail at its 50-day, a setup pointed out in the May 16 Futures
Market Recap. Inventories of reformulated gasoline remains about 10% below last
year’s levels just ahead of the Memorial Day weekend, the start of the heaviest
driving season. 

 

Heating oil
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for the third consecutive day out of the handle of its cup and handle. June crude oil
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also gapped to its highest level of the year and inched a year-to-date high
close by a penny at 29.98.

 

Although gold has gotten all of the attention in recent days, copper
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powered off contract lows on rising volume. The Fed cut interest rates to their
lowest level in seven years last week. Copper prices are highly correlated with
interest rates because its demand is in large measure determined by industrial
and construction spending. Today is the fourth straight up day, and the metal has
gapped or lapped in each of those days. This represents unusual strength off the
low. Copper closed up 1.50 at 79.80.

Also in the meats,
June lean hogs’
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PowerRating) pattern of recent rising lows (throughout
May) indicates short-term strength and suggests a test of the April 25 unfilled
gap. A test of that area in the 71.000 area would complete the right shoulder of
a head-and-shoulders-top pattern. Hogs slipped .575 to 67.500.

The bottom fell out from under wheat as good
planting conditions enhanced the chance of another large crop. At the 264 level, July wheat
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closed 8 3/4 lower at 263 and leaves a Turtle Soup Plus One Buy setup for
tomorrow.