Earn, Earn, Earn!

April 10, 2001
Marc Dupee

Optimism dominated stock index futures trading as traders
posited that bears have overshot to the downside and that too much bad news
and negative earnings has been priced into stock shares. Just last week the
Nasdaq 100
(
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PowerRating) came within 350 points of hitting a triple-digit
figure!Â

With Motorola
(
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PowerRating) kicking off the technology
earnings season, players placed bets that the nearly 1,800 companies that will
release performance results in the coming two weeks will not surprise
to the downside. Even if they do, a Nasdaq 100 in triple digits acts as a
psychological “put option” insurance policy against further
declines.Â

Stock index futures and bonds trajected in opposite directions as traders lifted
offers in the indexes and hit bids in the bonds on speculation that the indexes’
meltdown and bearish sentiment will go into hibernation, at least for a time. Money flowed out of
the bond market and into equities with the Naz 100 logging its biggest one-day
percentage gain in recent memory, adding as much as 9% before closing up 7.87%.

The action in stock index futures began in the last few
minutes of equity trading yesterday when the futures sprung above opening levels
and closed aggressively positive and near the session’s highs after dipping into
negative territory during Monday’s “noon swoon.” Follow through
occurred during the Globex session and throughout the morning.Â

Interest rate futures gapped lower to trigger a Pullback From Lows
setup and continued straight south. T-bonds
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PowerRating) and 10-year notes
(
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PowerRating) sank from the gap-down print and in counter-lockstep with the
high-range probing stock index futures. T-bonds closed 1 24/32 lower at 102
13/32 (at a two-month low) and 10-years fell 1 1/32 to 105 13/32, a one-month
low.

As capital flowed into US equities, currency traders
steadily purchased dollars. Moreover, traders focused on the view that the
European Central Bank is behind the curve in cutting interest rates to spur
economic growth in Euroland and that continental economic recovery will be
slower than in the US. The euro fell against both the dollar and the yen.Â

Energies followed through
on Monday’s probe to contract highs in April unleaded gasoline
(
HUK1 |
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PowerRating).
Traders reacted to a report from the Department of Energy (DOE) yesterday
that showed gas at the pump shot up as much as seven cents during the past two
weeks and over a nickel last week alone. The spike in retail gasoline was a
reminder to many of refining shortages last summer that drove pump prices above
$2 in areas such as Chicago where fear reigned that there could be insufficient
“clearer” gasoline to meet more rigorous environmental standards in
such designated cities.Â

Refining figures will
therefore be closely watched. Last week’s refining utilization figures stood at
approximately 88% of their potential, meaning they can jack up the
“cracking” of crude into refined products by as much as approximately
another 10%. The American Petroleum Institute (API) releases its weekly
inventory and utilization report after today’s NYMEX close.

May heating oil
(
HOK1 |
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Chart |
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PowerRating)Â was
particularly hot, in part because it lagged steep gains in unleaded gasoline
yesterday and also because of a fire on a Caribbean refining-island north of
Venezuela, Aruba. Heating oil is a distillate similar to diesel and sometimes
rallies on perceptions of shortages for the less-volatile truck fuel. Heating
oil rallied 7.52% or .0557 to close at .7915. Both unleaded and heating oil are Momentum-5
List members.Â

From the Implosion-5 List,
May cocoa
(
CCK1 |
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Chart |
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PowerRating) continued 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.
Basis May closed 13 lower at 968, striking a low of 954.

Talk
about it at TradingMarkets World

Earn, Earn, Earn!

BUY THE FEAR, SELL THE GREED

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