When They Come, Take Them

  • August 3, 2001
  • Marc Dupee

Trading is about getting an edge, and when you get a
confluence of signals indicating market direction, you might seriously consider
taking them. 

The following confluence of signals practically screamed
the potential for a selloff in the
S&P futures
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Prominently, the
S&Ps had a Turtle Soup Plus One
Sell signal, which registered after yesterday’s
pop-to-a-20-day-high-and-dump antics in this contract. Similar to
yesterday, the spooz sold off from their opening tick, cascading 10 handles
before rebounding with Fibonacci precision off intraday double bottoms. 

Another set of indicators also gave fair warning of the
potential for a spooz selloff. Today we had five signals from the
Market
Bias Indicators Page pointing down. More than one arrow here is often an
indication of direction, three is considered a critical mass to give a
larger-than-normal edge. Five indicators pointing the same direction present an
even larger edge. The S&Ps tumbled more than 19 before recovering off their
double bottoms to close down 3.00 at 1220.00.

Interestingly, yesterday we had four down signals as
well. Over the past two days, seven of the nine signals on this page have
flashed red, warning of the past two days’ selloff. 

As mentioned in yesterday’s Futures Market Recap,
euro FX futures
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Swiss francs
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setups but the strength of recent momentum implied they could very likely move
to new high ground following any reaction down to their TS+1 setups. The euro
FX held at the lows of the past two days after an opening cascade and made nice
gains off lows to new multi-month-high territory in an outside-day-on-high
pattern, a very constructive setup. These two contracts now lead the Momentum-5
List.

In the energies, the easing of tropical storm Barry in
the Gulf of Mexico sent natural gas
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down a sharp 6%. The recent lows at 2.960 held as the contract was supported at
one of its most explosive pivots in its history, at the continuation/breakout
point from May of 2000.

From the Implosion-5 List,
September dollar index futures
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juice
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 setups, while the strategy did not trigger shorts in August live cattle
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or October sugar
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PowerRating), protecting from entry as these downtrending markets rose from their opening prints.

Orange juice is oversold at these levels, and despite its
accelerating momentum, could bounce higher as it rebounds from a Turtle Soup
Plus One setup. 

Also from the Momentum-5
List, August lean hogs
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trotted to higher turf. Entry was difficult in bellies, which exploded late in
the session, showing that the rough and tumble traders in this pit do not want
to take anybody along for the ride in this contract. Bellies approached their
3.000 daily limit up level, finishing 2.775 higher at 99.375. Notice how bellies
went on a search and destroy mission to lower ground before being taken up. They
then stalled at the past two day’s highs, closing higher on the five-minutes before
catapulting to a contract record. Hogs gained .825 to 71.325.