Changing Places
Stock index futures and bonds are hurling in opposite directions as traders lift
offers in the indexes and hit bids in the bonds on speculation that recent bear
sentiment may be overdone and that much of the negative earnings news is
already priced into stocks.Â
The action in stock index futures began in the last few
minutes of equity trading yesterday where they sprung above opening levels to
close aggressively positive and near the session highs after dipping into
negative territory during the noon swoon. Follow through occurred during the
Globex session and throughout the morning. Key (intraday) gap support resides at
1163 through .63.50, an area which coincides with an intraday five-cluster
Fibonacci support level identified by Carolyn Boroden in her Stock
Index Price Action Levels service available through TradingSubscriptions.Â
Interest rate futures gap opened lower to trigger a Pullback From Lows
setups and have continued tanking. T-bonds
(
USM1 |
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PowerRating) and 10-year notes
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are sinking from the opening gap-down print and trading on the bottom of their
ranges, in counter-lockstep with the high-range probing stock index futures.
Energies are seeing
follow through of yesterday’s probe to contract highs in April unleaded gasoline
(
HUK1 |
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PowerRating).
Traders are spooked that multi-year highs in gasoline will repeat last year’s
records. (Retail) prices at the pump have shot up as much as seven cents over
the past fortnight (two weeks), piggybacking on fear-engendered price spikes
seen in recent months in natural gas and heating oil. Unleaded gasoline
(
HUK1 |
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PowerRating)
is up .0338 to 1.0250, April crude oil
(
CLK1 |
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PowerRating) is up 1.07 to
28.25, and
heating oil
(
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PowerRating) is up .0442 to .7800. Unleaded gasoline and
heating oil are among the top three contracts on the Momentum-5
List.Â
As capital flows into US equities, currency traders are
steadily purchasing dollars. Moreover, traders are focusing on the view that the
European Central Bank is behind the curve in cutting interest rates to spur
economic growth in Euroland and that recovery there will be slower than in the
US. The euro is lower against both the buck and the yen.Â
In Chicago futures trading, the June
euro FX futures
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ECM1 |
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PowerRating) is off .00950 to .88900 and
June dollar index futures
(
DXM1 |
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PowerRating) are rallying out of their Pullback From
Highs setup for a .69 gain to 116.09.
From the Implosion-5 List,
May cocoa
(
CCK1 |
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PowerRating) is continuing its descent out of its three-month
head-and-shoulders top. Traditional measuring objectives suggest a test of twice
the distance from the head to the neckline which would coincide with the 800
area.