Oil Bloodies Dow Futures

  • October 12, 2000
  • Marc Dupee

Attacks against both American sailors
and Israel police put the world on alert that heightened tensions in the region
could bring greater instability, impede the flow of the region’s most valuable
resource, and send oil prices even higher. Energies soared on the rekindled
violence as financials got hammered on fears of energy inflation. Additionally,
a Home Depot performance warning gave Dow futures traders yet another reason to
doubt forward earnings of blue chip stocks. Safety plays were seen in gold and
bond futures.  

A suicide bomb attack on a US naval vessel in Yemen and
heightened Israeli-Palestinian tensions that spurred a retaliatory missile attacks
have many wondering whether there will be a disruption of Middle East oil flows
to the West. Nearby New York crude oil futures
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a benchmark for world oil prices, surged as much as 10% before settling 2.81
higher at 36.06. Heating oil
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unleaded gasoline
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Energy contracts left multiple signals that they were
primed to rally. All four of the energies either registered on the Momentum-5
List or the
New 10-Day Highs List and registered “all systems up” signals on the
Futures
Trend Matrix. The energies also all made good on Off The Blocks
setup entries, a strategy which gets you in on Momentum setups. 

Natural gas
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oil and products futures markets, acted as an early warning indicator, surging
in the minutes before crude opened to a fresh all-time high (5.760) before
closing up .122 at 5.630.

Dow futures are getting hammered, Dec. S&Ps hit their
lowest levels of the year as the violence in the Middle East chilled
oil-dependent and inflation-sensitive stocks. Dow financial components JP Morgan
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each on memories of stagflation and inflationary fears. Home Depot’s warning
that it would fail to meet earnings expectations clipped 28% of its value while
Wal-Mart
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on the Dow. The whole mess resulted in a 405.0 trouncing for Dow futures to
10,110.0. Spoos
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NASDAQ 100 futures
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Both December T-bonds
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also from the New 10-Day Highs List,
gained 10/32 to 99 16/32, while the shorter end of the yield curve, contracts
like 10-year
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contract highs.  

Gold’s move could be seen as a continuation move off a Turtle Soup Plus One buy
signal logged three days ago (and a double bottom) as traders sidelined from the
worst (Nasdaq) market since 1974 looked for a place to park funds. As mentioned in
our Financial
Futures Pre-Opening Outlook, it would not “take much flow toward a
slack market like gold to boost prices.” The December contract surged as
many as $3 dollars an ounce after the Mid-Day Futures alert to close 5.8 higher
at 278.8, while leaving multiple intraday entry opportunities.  

Finally, corn, which just ascended to the Momentum-5
List, gapped open to a new three-month high following a bullish USDA report
but headed south from its session high-mark to close 3 1/2 higher at 208.