Who’s Got True Grit?

• April 12, 2001
• Marc Dupee

Stock index futures traders showed grit by going home
long the three-day holiday weekend. The indexes closed on their highs,
indicating  players’ expectations for a continuation of the past day’s
rally into next week. 

The
Nasdaq 100 futures
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S&P futures
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Dow futures
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Semiconductors
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Yesterday, the SOX surged as much as 14% before closing 8% higher. The SOX
tacked on another 5% today, recovering from an early 5% deficit to boost the
broad market. Microsoft also closed in an intraday continuation pattern, which
could be key since it is the most heavily weighted stock on the Nasdaq 100
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the index underlying the
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As Jeff Cooper pointed out in this morning’s Momentum
Stocks Insight, “Keep an eye on Intel (INTC)
and Microsoft (MSFT),
as there is huge open interest in options on these two Dow names. If they come
for these two, it will be the tip-off that we’re going up.” Microsoft
arched out of a multiple intraday
pattern to close at a two-month high. Although heavier-than-normal volume did
not accompany MSFT’s breakout, this strong close and pattern setup are an early
indication of potential action next week that, as Jeff so ably puts it to, “put the
indices in place for the potentiality of a runaway move into next Friday’s
option expiration.”   

In a pre-Good Friday shortened session, interest rate
futures fell. T-bonds
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producer prices in seven months; on the lowest Michigan consumer confidence
report since November 1993; and on the drop in retail sales. But the turnaround
in equities — especially the Dow — prompted a test to
recent lows in the bonds, an Implosion-5 List
market, leaving the June contract down 10/32 at 102 10/32. 10-year notes
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New 10-Day Low yesterday (also an indication of possible down activity for
today), fell 11/32 to 104 25/32.

Citing that conditions in North America have reached a
“crisis” in the supply of some fuels, the International Energy Agency
warned that prices of gasoline could soar this summer when the driving season kicks
into high gear. 

The energy contracts have been led higher by unleaded
gasoline and by strong gains in heating oil, an oil derivative
product similar to diesel. Energy contracts dominate the Momentum-5
List. May
unleaded gasoline
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with five gaps, two expansion bars, and several laps etched on the daily graph
within the last 21 days. As mentioned in yesterday’s Futures Market Recap,
energy contracts left tails near highs, implying (upside) continuation moves.
Unleaded, crude oil
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heating oil
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entries, before declining. Unleaded closed .0010 at 1.0231, heating oil
fell .0154 to 07805, while crude managed a gain of .07 to 28.25.

Inclement weather in the
Great Plains and lowered crop forecasts in growing states spurred wheat
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its second day of gains off a retest of the March 30 low. Basis May closed 6
cents higher at 266 3/4. The soybean complex edged slightly lower with
soybean oil
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formation. The May bean oil contract is still  being
dominated by the big down bar forged on Tuesday, with closes below the mid point
of the April 10 bar for the past two days. 

 

May Pork bellies
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where commercials stepped in to lift the contract off its low mark of the day to
end 1.775 lower at 88.250.