Bearish Bar, Bullish For Bonds
With yesterday’s outside bar down in all three stock
index futures contracts, the likelihood of a cascade to measured-move objectives
in the contracts — down to 1125 in the SPU1 and 1510 in NDU1, using
traditional measuring techniques — increases. We will likely see a corresponding
flight-to-safety move in bonds.
Momentum in debt futures has already been established
with benchmark September T-bonds
(
USU1 |
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PowerRating) and
10-year notes
(
TYU1 |
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PowerRating) each registering on — and now
leading — the Momentum-5
List. Any selloffs will likely be accompanied by continuation moves in
these contracts. Utilizing traditional measured-move analysis (see articles in
Futures Education), a conservative move out of USU1’s inverted
head-and-shoulder/double bottom is to fill the gap left on March 26 to 105
23/32, which would leave USU1 just off contract highs.
Stock index futures are showing follow-through momentum
to the downside as the time of this posting and have sent bonds up 1/4-point off
lows.
Also from the Momentum-5
List,
euro FX futures
(
ECU1 |
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News |
PowerRating) and
Swiss francs
(
SFU1 |
Quote |
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News |
PowerRating) are rallying and are making good on Off The Blocks
entries.
August pork bellies
(
PBQ1 |
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Chart |
News |
PowerRating) have shown
nascent signs of momentum after consecutive limit-up moves last week and are now
a Momentum-5 List
member. The August contract has approached triple tops and an Elliot Wave count
implies that if we break the trips (triple tops), the current up-wave would be
wave three of a five-wave move, implying significantly higher prices. The
current swing high (the July 23, 93.875 peak) could be used as a Pullback From
High marker. Hence, this would imply that we are in day two of a pullback with
the 38.5% retracement support of the most recent upswing coming at 89.790,
coinciding with its 20-day line.
The weekly crop progress report showed a deterioration in
the condition of beans and especially corn. One of the lagging grains, in
comparison with soybeans’ hefty rally yesterday, corn
(
CZ1 |
Quote |
Chart |
News |
PowerRating), leapt
open to come off a short-term oversold condition. Basis December has pulled back
from its highest levels of the day and is still providing a defined-risk entry
opportunity in a (Haggerty) Slim Jim-like consolidation.
Wheat, too, leapt open on a weaker crop report, has come in
during the session, but is finding support at the closing levels of the
“turbo tails” (the 7/16 and 7/23 tail-pair, see yesterday’s Futures
Market Recap). This market is also a Pullback From
Highs contract.