Naz Nearly Invokes Three Strike Law

• January 2, 2001
• Marc Dupee

The Nasdaq 100 futures came to within paces of dropping 10%, the level
required to trigger an extremely rare third limit-down trading halt. Limit moves
occur on declines of 2.5%, 5%, 10%, and 20%. Chicago Mercantile Exchange rules
impose trading curbs where trading is halted between 10 and 12 minutes once the
futures has traveled by a point value calibrated at the beginning of each
quarter that corresponds to the above percentages. 

The point values for this quarter will be 65.00 for the 2.5% level, 130.00
for the 5% level and 260.00 for the 10% limit move. If recent volatility
continues, the lowered limit point values will mean there will likely be a
greater number of limit-down trading curbs imposed this quarter. 

Nasdaq 100 futures
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level but then pulled back from its lows to close down 217.50 at 2157.00. Techs
got whacked after a report suggested the economy continues to decline and as
analysts downgraded Internet storage and security stocks. Check Point Software
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dipped 38.00 to 1297.00 and
Dow futures
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Oil traders listened to comments that production cutbacks “will be
enough” by the Saudi Arabia Oil Minister. The market is anticipating OPEC
to slash its output–some fear by as much as 1.5 million barrels a day–in order
for the cartel to reach its goal of $25 an OPEC barrel. February crude oil
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rallied .41 to 27.21 and
unleaded gasoline
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Natural gas
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Sell setup despite press suggesting that national inventories of the heating
fuel might be insufficient to meet demand this winter. Forecasts for warmer
weather in the next week ahead resulted in prices declining in the overnight
(Access) session. Gas gapped sharply lower in early New York trading, declined,
pulled back, and then provided an entry opportunity in an intraday pullback from
lows setup. NGG1 closed 1.411 lower at 8.364.

Treasury futures rallied, accelerating out of setups after the first limit
down move in the Nasdaq 100 futures (around 10 AM ET). March 10-year Treasury
note futures
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Pullback From Highs
setup before exploding to a new contract high. Similar action
occurred across the yield curve. T-bonds
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Pullback From Highs setup to end 1 21/32 higher at 106 9/32. A near-10-year low
in the National Association of Purchasing Management (NAPM) report to a level not seen
since the last recession and a Wall Street Journal economists poll that
predicted GDP growth of 2% in the next six months also supported bond
prices. 

Declining stocks and the gloomier economic picture continued crunching
March dollar index futures
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juxtaposed to the domination of foreign currencies on the Momentum-5
List: Euro FX futures
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Swiss francs
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British pounds
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juice
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coffee
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or  Pullback From Lows 
setups. Orange juice declined to a two-month low despite freezing temperatures across Florida’s citrus belt that may have damaged trees.