Bond Haven

October 17, 2000
Marc Dupee

Jittery about falling equity prices in the week of the market’s biggest release
of third quarter earnings reports, traders piled into the perceived safe haven
of government debt, driving T-bonds
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PowerRating) to new contract highs. Uncertainty about oil prices also had a
downward impact.Â

T-bonds signaled they could make a stab to the upside by
posting on the Momentum-5
List. The bonds made good on low-risk Off The Blocks
and 1090
Opening Method entry setups. Another factor which accentuating the move in
bonds were comments made by the head of the world’s biggest bond fund, Bill
Gross of PIMCO in California, who said owning corporate debt (bonds) at this
time should be avoided. T-bonds closed 24/32 higher at 100 3/32 and 10-years
added 14/32 to close at 101 9/32.

December S&P futures
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failed to trade higher than their opening 5-minute bar and plunged. A similar opening-range
entry system is used by many of the world’s top pit traders, where if the
opening bar is not penetrated by a pre-set number of point, traders sell. Such
opening range setups worked out very well Tuesday with the S&Ps tumbling as
much as 40 handles before settling 32.50 lower at 1359.00. Similarly, after a
50-point lap-up opening, Nazdogs tumbled as many as 203 points from their highs
before closing 136.00 at 3180.00.

Jeff Cooper often says that “fast moves come from false moves.” The
gap up that failed to follow through and the inability of stock index futures to
capitalize on an unusually high six up signals from the
Market
Bias Indicators Page, were strong contrary signals glaring that further
downside was in store for stock index futures.

September dollar index futures
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Sell setup for a loss of .56 to 115.71. As mentioned in the Futures
Trading Outlook, “soupy” setups looked like they could
stall further upside progress in the dollar index as well as stall further
downside movement in the Euro FX
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and Swiss francs
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a continuation of the move to the downside in these contracts, and for more
upside in dollar index futures, as traders test the European Central Bank’s
resolve after it said it would not intervene in world currency markets to
support the euro. Euros and Swiss franc futures also both registered on the
Implosion-5 List.Â

From the Pullback From Lows List,
December gold
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up a Turtle Soup Buy pattern (meaning the buy trigger was hit at the 10/6, 271.6
low, in a reversal pattern occurring in the same day as the pattern). Gold went
on to fill the morning gap and to close down just .5 at 273.4, recovering $2
from the new low.Â Â

In the grains,
December soybean oil
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good on its Implosion-5
reading.Â

Coffee
(
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PowerRating)Â followed through on Monday’s 7% move with another hefty
push to the upside to clear and close above a two-month base. Coffee made good
on its Momentum-5
List hint for a 3.05 gain to 88.70, rallying on a lack of rain and forecasts
for more dry weather.

Bond Haven

BUY THE FEAR, SELL THE GREED

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