Method In Stalking A Low

  • June 1, 2001
  • Marc Dupee

While attempting to pick a bottom can be a difficult and sometimes painful
pursuit, certain chart characteristics stand out that can speak volumes about a
potential turn in the trend. And the grains are exhibiting signs that they could
come off lows. 

Corn
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soybeans
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bottom may be in place. Also, corn lodged back-to-back expansion bars and lapped
open its second straight day, also constructive. Two days ago, corn also had a
Turtle Soup Plus One Buy signal and left a tail at the contract low, a sign of
buyers stepping in at the low. Corn finished up 6 at 198 3/4.

Wheat’s gap opening and closure of the May 21 gap is also
indicative of a bottom in this contract. Wheat closed 3 3/4 higher at 270 3/4.

Soybean’s gap took them to a two-and-a-half-month high
for a gain or 4 to 455. Yesterday’s expansion bar in beans coupled with the gap
out of the recent consolidation is constructive. The move higher also signifies
the breaking of the neckline of an inverted head-and-shoulders pattern. 

Fundamentally, excess wetness in the primary grain growing regions of
the country could have a deleterious effect on both new and old crops. 

In financial futures, the National Association Of Purchasing Managers
came in below consensus and this is seen as clearing the way for the Fed to stay
on the offensive in easing interest rates. The Fed’s next FOMC interest rate
meeting is on June 27. 

September
T-bonds
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yields, inversely, lower) and tacked on more than 1 point before settling 25/32
higher at 100 11/32.

The July Fed Fund futures
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in a full quarter-point rate cut by the June meeting (i.e. the implied fed funds
rate for July is 3.74%). 

An NAPM-equivalent survey of eight European nations
showed that manufacturing slowed in the three economies that make up 75% of the
continent’s GDP — Germany, France and Italy. This sent the

euro FX futures
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a downwardly trending channel. As mentioned in the Mid-Day Futures Market Alert,
the ECM1 hit the bottom of a channel and was likely to find support there. The
ECM1 rallied 46 ticks off the lows to finish up .00180 at .84770, leaving a tail
at a year-to-date low. Both the euro
FX and Swiss francs were leaders on the Implosion-5 List,
but also notice that the Turtle Soup Plus One Buy signal in the ECM1 — although
it was too extended to trigger — provided an indication that the euro FX could
reverse. 


Swiss francs
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at their contract lows and left a tail for a second straight day. The Swiss
closed up .0006 at .5576.  

From the Momentum-5
List,
June dollar index futures
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high for a second consecutive day before giving back gains to end down .20 at
118.99.


Japanese yen
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Sell trigger, a level that equates to the top of yesterday’s gap window in
the contract. Notice here how the yen gapped open and sold off from the high
tick and how the TS+1 — the inverse case of the ECM1 — could be used as an indication of a reversal off the gap-up
opening. 

In a one-day delay, August gold
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good on its Turtle Soup Plus One Buy reversal. As mentioned in the Mid-Day
Alert, the 78.6%
retracement and the 50-day moving average also provided support. Gold closed up
1.1 at 268.0.

Coffee
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off over sold conditions. But recent, powerful down bars accompanied by heavy
volume on May 14, May 25, and yesterday suggested a move to fresh contract
lows. Watch the COTs for a short squeeze shortly in this contract. Coffee closed
down .60 at 57.90.