Energies In Overdrive
Energies power higher in one of the biggest one-day rallies of the
front-contract month as traders began taking seriously OPEC officials rumblings
that the cartel should cut output by a larger-than-expected quantity. OPEC was
originally expected to cut output by 1.2 million barrels a day, but reports have
emerged in recent days of calls for cuts of more that 2 million barrels.
Unleaded gasoline
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final minutes of trading, doubling the day’s already sizeable gains to finish
6.7%, or .0556 higher at .8850 as traders guzzled the nearby contract. Gasoline
had an unusually strong combination of signals, registering on both the Momentum-5
and 6/100 Low Volatility
lists. The signals indicated direction as well as the likelihood of a
larger-than-normal move as volatility in this contract reverted back to its
100-day average.
February crude oil
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and
heating oil
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and 6.7%. A comment from the Qatar Oil Minister, Abduallah bin Hamad al-Attiyah,
that a minimum of a 2 million barrel cut was in order and that all members of
OPEC agreed helped fuel the rally. Yesterday’s American Petroleum
Institute report came in as expected and showed inventories of heating oil and
crude oil are on the rise while stores of unleaded gas fell a bit.
Up 166, down 126, up 138. That’s the kind of volatility
the Nasdaq 100 futures
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at 2441.00. S&P futures
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Dow futures
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on comments from one of the Federal Reserve’s FOMC voting members, Cathy Minehan
of Boston, that the economy will not skid into recession this year. Gains
were capped as the tech sector expressed concern about earnings from Motorola
and Yahoo! expected after today’s close. The Naz then overcame what amounted to
a warning by Cisco’s CEO, a positive sign.
T-bonds
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Minehan’s comments as a stronger-than-thought economy implies that the
Fed may not lower interest rates as much as the treasury market is pricing in.
The March contract accelerated to the downside as a large supply of corporate
debt hit the market as well. Treasuries (and Treasury futures) have rallied in
anticipation of Fed interest rate cuts and the higher-priced corporate debt was
more in demand in the face of the government’s sale of 10-year inflation indexed
bonds. USH1 closed 25/32 lower at 104 16/32 and 10-year notes
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20/32 lower at 105 10/32.
The downside action today altered perceptions about a
50-basis-point cut at the Fed’s meeting this January. The February federal
funds futures
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actions, priced in just a 78% chance of a 50-point cut.
February gold
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top to make good on its Implosion-5 List
reading. Feb. gold closed 2.9 lower at 265.6, at a 15-month low.
As mentioned in yesterday’s recap, March wheat
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were primed to rally out of Pullback From
High setups. Wheat added 4 to 289 and corn gained 2 to close at 229 1/2.