Bucking The Fed
The dollar is sending a "loud-and-clear"
message, rallying on news that normally would make it go down and thereby
implying it could hit new highs. Interest rate cuts usually spell lower currency
prices in countries where rates get cut as institutions move funds to the
highest-yielding "risk-free" interest. But Momentum-5
List June dollar index futures
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despite the Fed’s 50-basis point cut yesterday and forecasts for further cuts
through the summer.
Dollars also rallied despite stock indexes hitting new
two-year lows yesterday and a big rally in Tokyo stocks. When a stock of
commodity does something contrary to what it is supposed to do, that is a clear
signal of underlying (in this case, upside) strength.
From the Implosion-5 List,
the dollar is stronger against the yen, with the June contract
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tanking in overnight trading as Japanese markets got their first post-holiday
opportunity to trade since the Bank of Japan cut rates to zero. Short entry was
possible at the low of two days ago and the intraday pattern in the yen is still
down with two down gaps providing resistance, the closest at .8185, for
defined-risk entry.
Stock index futures rallied after touching new lows on
the open. Both
Nasdaq 100 futures
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slightly overshot the 38% retracement of the pre-Fed announcement high to this
morning’s low providing entry below a fractal (a high surrounded by two lows).
The break of Fibonacci support defined by Carolyn Boroden in her Stock Index
Price Action Levels service available through TradingSubscriptions.com implies
these contracts are going to new lows.
In the energies, weakness in crude oil–as derivatives heating oil
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rally in the session–sets up sympathy shorting opportunities in HOK1 and HUK1.
These contracts have attempted rallies in the past week and sold off, leaving
tails as unleaded gasoline approaches the neckline of its head and shoulders
pattern. Unleaded is also trading at its 20-day moving average.
May sugar
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PowerRating) is making good on its Turtle Soup Plus One Buy
setup.
Gap resistance was filled but the 5.340 high in
natural gas
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setup. The catalyst for a probe to new lows in NG could come on today’s AGA
report on weekly stockpiles and would be against some analysts prognostications
for higher prices in gas as the summer cooling season approaches and as
California experiences a fresh bout of rolling blackouts.
Soybeans
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SK1 |
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PowerRating) are executing classically
out of their Pullback From Lows
setup, falling from the opening to a test of contract lows.