An Easy Way To Have Anticipated Today’s Pullback
TradingMarket’s
Market
Bias Indicators issued a rare but powerful signal that stock index futures
could pull back today. Any three of these
signals (a critical mass) pointing in the same direction is generally a strong suggestion
that the major averages will move
in the direction of the arrows. Today we had an unusually high number — seven
— of signals pointing down which provided a stronger-than-usual hint that the
contracts could trade lower.Â
Stock index futures lapped lower and then kept heading
south. Nasdaq 100 futures
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NDM1 |
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PowerRating) closed 88.50 lower at 1958.50, S&P futures
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SPM1 |
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PowerRating) fell 22.30 to 1290.50, and Dow futures
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DJM1 |
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PowerRating) sank
160.0 to 11,125.0.
T-bonds
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USM1 |
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PowerRating) gapped lower, rallied to test yesterday’s inside-day
high then closed in the lower half of today’s bar for a finish 6/32 lower at 100
4/32. This up-down action triggered T-bond’s Pullback From Lows
setup below yesterday’s low. The outside-bar down and tail that bonds traced
today are indicative of additional follow through south.Â
Lower-than-expected growth and accelerating inflation in Europe’s two largest
economies, Germany and France, is continuing to have a negative impact on
euro FX futures
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ECM1 |
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PowerRating). Both the ECM1 and
Swiss francs
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SFM1 |
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PowerRating) traded to a year-to-date low and are on the Implosion-5 List.Â
Japanese yen
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JYM1 |
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PowerRating) were the
primary beneficiaries of the decline in European currency futures, surging
against the euro and added .0197 to close at .8372.
From the momentum-indicating
New 10-Day Highs List, June dollar index futures
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DXM1 |
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PowerRating)
rallied .62 to a contract high of 118.41.Â
This weekend will indeed
be Memorial. Unleaded gasoline at the pumps is priced at record highs (on a
nominal, not inflation-adjusted basis). Unleaded gasoline
futures
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HUM1 |
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PowerRating), which represent wholesale prices, rocketed to a new high
just days before the three-day weekend that marks the start of the heavy summer
driving season. HUM1 closed at a contract record, up .0511 at 1.1589.
Also in the energies, heating oil
(
HOM1 |
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PowerRating)Â inched steadily higher out of the handle of its cup and handle. Its current
outside bar near its spike high from last October suggests follow through.
Heating oil also appeared on the 6/100 Low Volatility
List, hinting that a large move could soon be in store for this contract as
volatility reverts to its norm. HOM1 closed .064 higher at .8153.
Following through for a second day on its Turtle Soup
Plus One Sell setup, copper
(
HGM1 |
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PowerRating)Â sank
to fill Monday’s gap. As mentioned in the Mid-Day Futures Alert, the upside momentum evidenced by unfilled gaps off
the recent low suggests that this contract will continue higher. Copper
recouped losses after filling the gap and closed down just .10 at 78.55 and is
in the second day of a Pullback From Highs momentum situation. A
seven-year low in interest rates and the belief that the economy will rebound
are fundamental factors underpinning copper’s potential advance.Â
Trading setups do not always shape up in textbook
fashion, so it’s productive to work to comprehend the concepts underlying
trading patterns so you can identify them when they do not strictly conform to
rules. For instance, June lean hogs
(
LHM1 |
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PowerRating) failed by two ticks to
log a new 20-day low yesterday and, therefore, did not officially register a
Turtle Soup Plus One Buy signal. However, the contract very nearly traced the
pattern and today briefly traded to a new three-month low. Like a Turtle Soup,
entry could be made on a trade back through the prior 20-day low and a stop
placed at today’s 66.100 low. Hogs closed 1.075 higher at 67.450.
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