All Shook Up
Weakening demand due to internal disruptions caused by a devastating earthquake in India, one of the world’s
largest consumers of silver, pressured silver, forcing the metal to drop out of
the handle of a cup-and-handle pattern. Friday’s Commitment
of Traders report suggested a squeeze. The report showed an unusually high number of funds and specs
long the metal, setting up a situation ripe for a bull squeeze, a development
highlighted in this morning’s Pre-Opening
Metals Outlook. March silver
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could make a larger-than-normal move by registering on the Multiple Days Low
Volatility and the 10/100 Low Volatility lists.Â
April gold
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PowerRating) fell in sympathy with silver’s decline. India is
also the world’s largest domestic market for gold bullion. Gold gapped lower and
closed near opening levels, leaving a fractal or replicating formation similar
to the December double top. Notice how the double top from December hit the
measured move objective–the distance from the peak to the valley of the double
top subtracted from the valley–before rebounding. The fractal implies a similar
move lower. For additional information on calculating measured moves from patterns, see
my article Defining
Reward/Risk Ratios With Chart Setups In The Futures Markets.Â
An unusually high number
of down-pointing arrows on the
Market
Bias Indicators Page gave stock index futures a negative bias on the day.
Add an Implosion-5 List
reading and a posting on the New 10-Day Low List
and you have the recipe for a further test of the downside in the Nasdaq 100 futures
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PowerRating). They fell as many as 62, just three shy of the limit-down curb, before
recovering and closing 7.50 lower at 2481.00.
S&P futures
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before finished on the highs of the day, up 8.70 at 1362-even, in a relatively
listless session. The market did punch through and close above a key, intraday
resistance level defined in an intraday update from Carolyn Boroden in a new
subscription service called S&P
and Nasdaq Price Action Levels. Carolyn identified the 1357.20-1358.10 level
as “short-term” resistance in the update. The S&Ps closed rallied
through the level, used it as support before closing on session highs. The cluster zones
identified are very good for locating key areas to enter against with
measurable risk. You can have these e-mailed to you–up to three times per day.
For details and a one-month trial trial for $29, go to TradingSubscriptions.com.
Natural gas
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fell sharply on weather forecasts calling for warmer temperatures in the major
consuming region that uses the resource as a heating fuel, the Midwest. The contract gapped lower and hit limit-down
levels, and then re-opened to expanded levels. Notice that the intermediate- and long-term trend is negative on the
Futures
Trend Matrix, just as the worst of the winter appears to have moved behind
the market. The stock was on the Implosion-5 List last week, and still has
downside momentum.
Soybean oil
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PowerRating) had diverged recently from the grain complex,
posting on the Momentum-5 List, while such contracts as soymeal and wheat showed
their downside momentum by filling out the
Implosion-5 and Pullback Off Highs lists. Such situations–where a contract
diverges from their group–increase the likelihood of a reversal once a pattern
setup is indicated. Bean oil reversed after striking a to make good on its Turtle Soup Plus One
Sell signal, trading down to a low of 14.8700, before settling down .0600
at 15.0100.
March soybeans
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PowerRating)Â from the Pullback From Lows List
closed down 6 1/4 at 462 1/4 and
soymeal
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closed 4.3 lower at 162.8.
Also making good on its Turtle Soup Plus One
Sell setup,
Canadian dollars
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Cocoa
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PowerRating), the leading Momentum-5
contract, has registered three consecutive higher highs and actually set a new
closing record to finish up 17 at 1065