Absolutely, Positively, Biased

  • December 22, 2000
  • Marc Dupee

We’ve never seen it before but there were an impressive
six up signals on the
Market
Bias Indicators Page. As a general rule, three signals pointing in the same
direction taken together from the Market Bias Indicators Page is a very strong
sign for a reversal in stock index futures. More than three signals shows a
pronounced bias. An unprecedented six signals is an absolutely biased
sign. 

Today’s 8%-plus move in the Nasdaq 100 demonstrates the
potential power of the combined indicators. While six up signals is a rare occurrence,
two, three, or more signals indicating directional bias happen often (giving you
an edge) enough to make it worth your while to check out the Market Bias
Indicators Page every day. 

Stock index futures shot higher out of the gate. Borsellino’s
S&Ps A.M. noted that “it’s very impressive as we are more than 100
handles above the cash” in the Nasdaq 100, adding fuel to the upside
potential for the Naz futures
(
NDH1 |
Quote |
Chart |
News |
PowerRating). Go-go names that logged breathtaking
gains last year during the heat of the hottest bull market in Nasdaq history
screamed up, provided entry pullback/Slim Jim entries and kept on ticking.
Nasdaq 100 gleamer Juniper Networks
(
JNPR |
Quote |
Chart |
News |
PowerRating) was a case in point, with its
price action approximating that of the March futures: gap open, pullback entry,
Slim Jim on high, then follow through to bigger gains. 

Naz 100 components JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating) and SDL
(
SDLI |
Quote |
Chart |
News |
PowerRating)
caused a bit of a scare midday, knifing down after lunch and dragging the Naz
futures
(
NDH1 |
Quote |
Chart |
News |
PowerRating) back to within two fist fulls of handles of opening gap-open
levels. The downside momentum in these stocks was excessive. For instance, JDSU
tanked 8 points in 40 minutes, or at a rate of 12 points an hour. At that pace,
the stock would have gone to zero in a little over three hours. Such a pace is
unsustainable and both stocks bounced, bringing the Naz futures to close on
their high of the session while leaving it at the trigger of both an intraday
inverted head-and-shoulders and cup-and-handle pattern. The Naz futures settled
up 186.50 at 2469.00, Spooz
(
SPH1 |
Quote |
Chart |
News |
PowerRating) grew 38.70 to 1326.70, and Dow futures
(
DJH1 |
Quote |
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News |
PowerRating) climbed 202.0 to 1326.70.

Oil, gasoline, and heating oil futures rallied sharply
early in the session, with crude adding over $1 a barrel ahead of next month’s
OPEC meeting and speculation that the cartel will cut back its output now that
oil has touched down to a seven-month low. The energies finished where they
began after striking a technical level with mild gains. Feb. crude
(
CLG1 |
Quote |
Chart |
News |
PowerRating)
closed .27 higher at 26.18. Unleaded gasoline and natural gas fell. 

Traders dog-piled into currencies in overnight trade,
gapping the March
euro FX futures
(
ECH1 |
Quote |
Chart |
News |
PowerRating) steeply higher. Euro FX’s,
Swiss francs
(
SFH1 |
Quote |
Chart |
News |
PowerRating), and the British pound
(
BPH1 |
Quote |
Chart |
News |
PowerRating) are all on the
New 10-Day Highs List and the  ECH and SFH are on the Momentum-5
List. The overnight activity was in large measure follow-through momentum
benefiting from much thinner-than-usual volume. Otherwise, currencies showed
narrow ranges in pre-holiday slow trading. The trade largely ignored a durable
goods report that showed the US economy slowing at a slower-than-expected pace
while European industrial production last month slowed more than forecast.

March dollar index futures
(
DXH1 |
Quote |
Chart |
News |
PowerRating), naturally, took the brunt of the
strong upside activity in continental currency futures. The perception remains
that the European Central bank will keep their rates relatively high, as the US
eases rates. Foreign currencies benefit when their domestic interest rates are
higher because they attract funds seeking the higher returns. 

T-bonds
(
USH1 |
Quote |
Chart |
News |
PowerRating) and 10-year notes
(
TYH1 |
Quote |
Chart |
News |
PowerRating) upside action to new
highs worked to confirm the belief that US rates will fall. Both contracts are
also on the Momentum-5
List. 

Soymeal
(
SMF1 |
Quote |
Chart |
News |
PowerRating) clocked its sixth higher close in as
many days to make it a clean sweep on the Momentum-5
List.