A Deal At Down A Few Trillion

March 13, 2001
Marc Dupee

The TradingMarkets.com
Market
Bias Indicators Page signaled that the extreme selling in equity index
futures that had taken the Nasdaq 100 futures down as much as 14% in four days
might be overdone. Registering an up arrow, the
McClellan Oscillator signaled “oversold,” suggesting traders look
for setups on the long side. Two additional clues that stock index futures could
reverse were Turtle Soup Plus One Buy
signals in
S&P
(
SPM1 |
Quote |
Chart |
News |
PowerRating), and Dow futures
(
DJM1 |
Quote |
Chart |
News |
PowerRating). Although the
selling was too heavy yesterday to trigger a buy signal (at the previous 20-day
low), the signals in themselves served to implicate the likelihood of a
reversal.

Nasdaq futures closed 93.00 higher at 1806.50, the
S&Ps added 18.00 to 1209.50 and Dow futures closed 102.0 higher at 10,385.0.

European currency futures sold off after new data showed
an up tick in inflation reduced the chance that the European Central Bank will
cut interest rates soon enough or aggressively enough to stimulate the
continental economy. Fear that the slowdown in the US and Japan could lead to a
global economic slowdown is dominating many trading desks’ focus. Despite the
usual pattern where money flows into the country that offers the highest
interest rates, higher rates in Europe — coupled with inflation — are being
viewed as limiting the ECB in its ability to take aggressive action to ward off
an economic slowdown economy and stimulate demand for European-made
products.Â

In some respects, weakness in foreign currencies and
strength in the dollar reflect the best of sub-standard choices in the current
investment environment.
June dollar index futures
(
DXM1 |
Quote |
Chart |
News |
PowerRating) closed 1.05 higher at 13.10.

The
Japanese yen
(
JYM1 |
Quote |
Chart |
News |
PowerRating), from the Implosion-5 List,
lapped higher and closed on its highs of the day, as traders took note of the
Nikkei stock index at a 16-year low. The yen gained .044 to close at .8353.

April gold
(
GCJ1 |
Quote |
Chart |
News |
PowerRating) fell a steep 4.8 to 267,Â making good one
day late on a Turtle Soup Plus One sell signal, as traders square long positions
ahead of the Bank of England’s bullion auction. Lease rates also fell, helping
reduce the demand for futures.

Energy prices declined as traders bet that a slowing
economy — and a seasonal decline in usage — will translate into reduced demand for
oil. The decline in energy prices comes ahead of an OPEC meeting and ahead of
this afternoon’s weekly American Petroleum Institute’s estimate of national
inventory. April crude oil
(
CLJ1 |
Quote |
Chart |
News |
PowerRating)
closed .41 lower at 27.59.

Pork contracts rallied out of Pullback From Highs List
setups. May pork bellies
(
PBK1 |
Quote |
Chart |
News |
PowerRating) logged a classical move out of its
pullback to close 2.775 higher at 82.525. April lean hogs
(
LHJ1 |
Quote |
Chart |
News |
PowerRating)
gapped 1.500 higher and sold off to finish up .550 at 63.650. Sixteen new cases
of foot-and-mouth disease were reported in Great Britain and France reported its
first suspected case of the disease.

May cotton
(
CTK1 |
Quote |
Chart |
News |
PowerRating)Â rallied
late in the session to close above its Turtle Soup Plus One Buy
trigger, gaining .51 to 52.28. This kind of price action implies a
continuation of the late-day (upside) reversal tomorrow.Â

A Deal At Down A Few Trillion

BUY THE FEAR, SELL THE GREED

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