Bonds Giving It Back

  • October 11, 2001
  • Marc Dupee

T-bonds
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after leaving an island formation two days ago when they lapped down from a
three-day consolidation at contract highs. Bonds had been held higher due to
liquidity problems in the repurchase market and due to flight-to-safety
buying. 

But with stock index futures rallying to close the gaps left from the
September 11 attacks, traders are pulling money out of bonds and putting it
to work in stocks. Bonds were contained on the opening by intraday triple
tops and provided an intraday Pullback From Lows setup as well as a Slim Jim
short formation before the descent was stopped at the 38.2% retracement of
its most recent daily swing. 


Dow futures
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registering a
New 10-Day High and are making good on an Off The Blocks
 long entry. 

S&P futures
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could continue higher by closing above the 9/11 gap yesterday, a feature
pointed out in last night’s Futures Market Recap. 

The dollar is also benefiting from stocks closing the 9-11 gap. Notably, Swiss francs
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are down sharply and have continued lower after plunging in overnight trade.
A New 10-Day Low
gave you direction and a Multiple Days Low
Volatility reading implied a larger-than-normal move, a slightly rare and
nice combination of signals (direction and a higher likelihood of a big
move). The New 10-Day Low made this contract eligible for an Off The Blocks
 short entry, which the contract is making good on after trading below the
low of the opening five-minute bar. 

Wealthy Middle Easterners are reported to be pulling money out of the
Swiss and putting it to work into dollar assets and US stocks as the
flight-to-safety bid in the “safe-haven” unit evaporates. An
identical situation is playing out December British pounds

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Also in the fear and flight-to-safety department, safe-haven metals [gold
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and silver
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approval of the prosecution of military action in Afghanistan.

After a week of selling, Dec lean hogs
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oversold. Their
Turtle Soup Plus One Buy signal provided an indication to consider
reflexive short-term buys against the four-month lows, although an
alternative trigger would have been necessary as the previous 20-day low was
too far away to hit. 

Leading the Momentum-5
List, feeder cattle

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 long entry. This market is just shy of the 50% retracement of its
September-October plunge, so cover or consider reversing if long.