Read You–Loud And Clear

• March 12, 2001
• Marc Dupee

Stock index futures tanked to new contract or multi-month
lows, in a selloff that gathered momentum in the last hour, turning a slow
bleed into a torrent and culminating the session in a veritable cascade. But
multiple alerts were registered throughout TradingMarket.com’s Futures
Indicators Pages, providing signals that could be read Loud and Clear by traders
astute enough to click, observe and apply.

Stock index futures got off on a bad foot, still smarting
from a hangover from last week’s earnings warnings from chip giant Intel
(
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and slashed-workforce announcement from Cisco
(
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tech rippled throughout the broad market, bleeding into blue-chip tech,
financials and retail. By the end of the session, only one sector was left
standing in the green, the defensive gold and silver sector
(
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only by a fractional .22%. 

But there were ample hints that stock index futures could
sell off prior to today’s trouncing. Most obviously the
S&P futures
(
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and provided good entry off an Off The Blocks
(short) entry setup. The Spooz traded through a limit-down level and the psychologically
critical 1200 level before closing 52.60 lower at 1191.50 (1186.50 was the
bottom). 

Carolyn Boroden, in TradingSubscritption’s
S&Ps and Nasdaq Price Action Levels service, identified a swing top in
the 1220 through 1223.10 that coincided with the last intraday high before the
S&Ps Niagara-ed through 1200. 

Nasdaq 100 futures
(
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and closed 124.00 lower at 1713.50. Both the S&Ps and Naz futures were also
indicated in intermediate- and longer-term downtrends on TradingMarkets
Futures
Trend Matrix. If you look at the Matrix, you’ll note that the short-term
trend was up. Such “counter-swings” often present excellent
opportunities for rejoining the prevailing dominant (down) trend. To better
understand how to take advantage of trend and the Futures Trend Matrix, see my
educational article titled Profiting
From The Futures Trend Matrix. 

In another pattern setup from the Futures Indicators
Pages, Dow futures
(
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out of a Pullback From Lows
setup and tumbled as many as 475.0 intraday.

Meanwhile, Momentum-5
List market
T-bonds
(
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then sold off. Many participants expected the contract to move higher as traders
moved out of equities or stock index futures into the perceived
“safety” of bonds, but bonds closed just 5/32 higher at 105 18/32.
Watch this contract to possibly pop higher on tomorrow’s opening to equilibrate
as bonds closed prior to the worst of the late-cascade. 

Fear of a weak US economy and ever-weaker Japanese
economy inspired
March dollar index futures
(
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contract lows and even as European currencies sold off after an initial run
higher. The Japanese yen
(
JYH1 |
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the Implosion-5 List
for over a week. The New York Times is running a front page story about how the
Japanese economy is spiraling into deflation that could continue to hurt the yen
and the world economy. Dollar index futures closed .57 higher at 112.05 and
the yen closed .0057 lower at .8309.

May wheat
(
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setup and tagged the top of its recent range to leave the market in a Turtle
Soup and at a decision point. Today’s expansion bar in wheat argues for the
upside. 

As pointed out in this morning’s Agriculture Pre-Opening
Futures Outlook, the Commitment Of Traders report showed the US market to be
under pressure by commodity fund short positions. May sugar
(
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fell for a fourth consecutive day, out of  Friday’s Pullback From Lows
setup and closed down .17 to 8.83 on the session.