The Confident Europeans

  • August 22, 2001
  • Marc Dupee

An unexpected gain in business confidence by German executives gave
currencies, the leaders of the Momentum-5
List, a boost in overnight trade. The more optimistic outlook on the economy
from Western Europe’s largest country ups the chances that continental
economies will perform slightly better than previously expected and could
continue to exacerbate the outflow of dollars into European assets. 

Euro FX futures
(
ECU1 |
Quote |
Chart |
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PowerRating),

Swiss francs
(
SFU1 |
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News |
PowerRating), and British pounds
(
BPU1 |
Quote |
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PowerRating) all gapped
to new multi-month highs but found high on the opening tick and are selling
off to fill their overnight windows. 

Going the other way, September dollar index futures
(
DXU1 |
Quote |
Chart |
News |
PowerRating)
tumbled overnight, but are reversing in a same-day Turtle Soup Buy pattern.
These patterns occur when a market makes a new 20-day low (today) and
reverses above a previous 20-day low that occurred at least four days ago.
The current “tail” pattern suggests the DXU1 will also fill
the over night gap.

Also in the currencies in a pattern we have been seeing more of in all of
the futures markets,
Canadian dollars
(
CDU1 |
Quote |
Chart |
News |
PowerRating), which
registered a Turtle Soup Plus One signal for yesterday, are making good on
the pattern on the day following the signal and are up .0019 at .6476. 

Stock index futures are turning around from yesterday’s bout of heavy
selling that came as institutions “sold the fact” of a .25% rate
cut by the Fed and are treading in positive territory. Consider entering on
pullbacks. 

Energies are mostly higher following last night’s API weekly national
inventory report Both the API and the EIA reports showed declines in
stockpiles exceeded expectations. Comparative, year-on-year surpluses shrank
as well. Unusually strong demand for gasoline is a primary reason that could
potentially support energies. Other factors include OPEC’s scheduled cutback
of output from cartel members beginning September 1 and a cutback in
refinery utilization rates (meaning less production of gasoline and
distillates).