Bonds Ramp Up To Launch

• February 9, 2001
• Marc Dupee

Debt futures traders kept a close eye on the economy and
crumbling stock market as layoffs, downgrades, missed earnings and fraud sent
players to the perceived safety of bonds. T-bonds
(
USH1 |
Quote |
Chart |
News |
PowerRating) and 10-year notes
(
TYH1 |
Quote |
Chart |
News |
PowerRating) rallied,
moving above a short-term pullback from highs setups. T-bonds also issued another
sign of the potential to break to new contract highs by lapping open. A series
of gaps, laps and thrusts in a short time period can often lead to runaway
moves. This kind of market behavior has been studied in detail by Mark Boucher
and you should review his findings on Boucher’s
Trading Course available on TradingMarkets.com. You may also wish to check
out his very informative book, The Hedge
Fund Edge in TradersGalleria.
Additionally, Boucher will also be giving a
seminar in San Francisco on his successful trading style, March 7 through
March 9. 

T-bonds added 21/32 to close at 105 0/32 and 10-years
closed 14/32 higher at 105 17/32.

In a slightly different interpretation of the pattern,
Dave Landry observed in last night’s Futures
Market Trading Outlook that debt futures recovery rally yesterday
“suggests that their bullish cup-and-handle patterns at the 50-day moving
average remain intact,” giving an additional clue that debt futures could
rally. 

This week’s missed earnings at Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating) and
downgrade of Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) took their toll on stock index futures. The
SEC’s investigation of Lucent’s accounting practices made many wonder who else
might be miscounting the beans. Realizing that the apple doesn’t fall far from
the tree, traders ransacked AT&T, the biggest loser on the Dow. Telecom has
also been hampered by Worldcom
(
WCOM |
Quote |
Chart |
News |
PowerRating), which announced an earnings decline
of more than 40% yesterday. 

Announcements or rumors of layoffs at Dell, Motorola and
Applied Materials today provided additional evidence that demand for technology
products continues to wane. Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating) has been one of the few companies
not to warn recently about its performance and traders turned a wary eye on the
second largest producer of software and slammed it to a 13% loss, the biggest
decline among the Naz big caps. 

The Nasdaq Composite blew through the .618% retracement of the Jan. 3
to Jan. 24 rally, an important Fibonacci level. Ten of the 13 most heavily
weighted stocks on the Nasdaq 100
(
NDX |
Quote |
Chart |
News |
PowerRating) closed in the bottom quartile of
today’s range and only one closed up more than 1/4-point. Ouch! 

Things would have been even worse had third-tier
components not contributed. Network Appliance
(
NTAP |
Quote |
Chart |
News |
PowerRating) was one of the bright spots
in the session on heavy demand for its network storage gear: earnings and
revenues nearly doubled
year-on-year. Biogen and Amgen also rose between 3.9% and 4.5% each. 

In currencies, the Bank of Japan cut its
discount rate to .35%, bringing it in line with their federal funds rate
equivalent which stands at .25%. Yes, it’s almost free money. The Japanese yen
(
JYH1 |
Quote |
Chart |
News |
PowerRating)
continued its recent overnight gapping-lower behavior, losing an additional
.0070 to close just off its opening level at .8550. 

Many traders sold yen and bought euros,
spurring
euro FX futures
(
ECH1 |
Quote |
Chart |
News |
PowerRating) to a .00850 gain to close at .92700. Coming back from a steep, week-long selloff
to fill yesterday’s gap down, Swiss francs
(
SFH1 |
Quote |
Chart |
News |
PowerRating) triggered their Turtle Soup Plus One Buy
setup to close .0045 higher at .6044, rallying alongside euro
futures. 

Soybean oil
(
BOH1 |
Quote |
Chart |
News |
PowerRating) futures also
made good on their Turtle Soup Plus One Buy
setup to close .1000 higher at 14.5100. March soybeans
(
SH1 |
Quote |
Chart |
News |
PowerRating) came
back 4 cents to 456 1/4 after their big 12-cent loss yesterday and closed right
at their Turtle Soup Plus One buy trigger. 

April gold
(
GCJ1 |
Quote |
Chart |
News |
PowerRating)
and

silver
(
SIH1 |
Quote |
Chart |
News |
PowerRating), both from the
Implosion-5 List,
sank but recovered on dollar weakness. Weaker dollars make gold relatively less
expensive. 

Coffee
(
KCH1 |
Quote |
Chart |
News |
PowerRating) moved higher for
the second day after its Turtle Soup Plus One Buy signal yesterday. Coffee still
remains in a fractal or repeating pattern. Here is the chart from the Feb. 6 Futures
Market Recap, commenting on the development of the fractal.