Bear Ambush
Although losses were not as bad as last month when stocks reopened after
the 9/11 tragedy, equity index futures tanked in one of their worst days in
months, leaving a nasty bar pattern that suggests the intermediate-term
reflex-rally from the September lows may have ended.
Index futures lapped open after both IBM
(
IBM |
Quote |
Chart |
News |
PowerRating) and JP Morgan Chase
(
JPM |
Quote |
Chart |
News |
PowerRating)
beat Wall Street earnings expectations. But bears ambushed bulls, squeezing
any longs that might have been hoping the party could last beyond key
Fibonacci retracement levels and despite signs of an imminent
reversal.
December Nasdaq 100 futures
(
NDZ1 |
Quote |
Chart |
News |
PowerRating) opened up precisely into the 50%
retracement of its August-to-mid-September cascade and tumbled in a
five-wave pattern that is itself indicative of change in trend. NDZ fell
103.00 to 1308.50 and avoided the limit-down trading curb by surpassing the
down 5% limit level later in the trading session.
Dow futures
(
DJZ1 |
Quote |
Chart |
News |
PowerRating) were also capped at the 50% retracement of their
August-to-mid-September slide, slumping triple digits.
S&P futures
(
SPZ1 |
Quote |
Chart |
News |
PowerRating) were poised for a reversal after
registering a
Turtle Soup Plus One
Sell signal. After headfaking higher on the opening, the contract triggered the
Soup setup at
1102.50 — the previous 20-day high — and closed down 23.50 at
1076.00. Also, two down signals from
the Market
Bias Indicators Page, including an overbought reading on the McClellan
Oscillator, implied a pullback from the past three weeks rally off the three-year
low.
Energy traders looked eastward after last night’s weekly report from the
American Petroleum Institute. The report showed inventories
fell to their lowest level in six months, but scrutinizers noted that most of the drawdown in inventories occurred in western states. NYMEX energy contracts are primarily
based on the supply and demand situation in eastern states, where
more ample supplies exist.
The Department of Energy’s inventory report, released after the API, worked to
confirm what could have been construed as a bullish report by showing a drawdown in inventories only about one-third the size as the API. In last night’s new
Nightly Futures Traders Report,
I pointed out that energies
had logged consecutive outside days down in recent days, demonstrating a
negative bias. All three contracts made good on Off The Blocks
shorts and fell as much as 1.5% to 2.1%. November unleaded gasoline
(
HUX1 |
Quote |
Chart |
News |
PowerRating)
tagged a new contract low.
Currencies rallied early to provide shorting opportunities out of Pullback
From Lows setups. Euro FX futures
(
ECZ1 |
Quote |
Chart |
News |
PowerRating) fell .0056 to
.90100. And
Canadian dollars
(
CDZ1 |
Quote |
Chart |
News |
PowerRating)(
USZ1 |
Quote |
Chart |
News |
PowerRating) continued higher with flight-to-safety
gains and closed in the island gap left on Sept. 10, up 12/32 at 106 23/32.
December cotton
(
CTZ1 |
Quote |
Chart |
News |
PowerRating) got
going a bit out of its
Turtle Soup Plus One Buy signal in a shortened trading
session.