Confidence Stimulates Financials
Volume surged in financial futures after the Conference Board’s consumer
confidence index dipped unexpectedly to its lowest level in four months.
Debt futures surged while stock index futures cascaded as one of the few
factors underpinning the economy and equity markets — consumer spending —
is believed will now slip away and perhaps send the economy into recession.
Consumer spending accounts for about two-thirds of gross domestic product
and consumer confidence is a leading indicator of spending habits. Tomorrow
the government will release the final revision of Q2 GDP figures and many
economists are forecasting a drop to zero growth from the previous revision
of .7% growth.
10-year notes
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PowerRating) had already opened above their Pullback From Highs List
trigger and exploded out of the Slim Jim they had traced in the quiet period
before the release of the report. Today’s move takes the TYU1 to a new
contract high but also sets up a Turtle Soup sell reversal below the Aug. 17
high, the previous 20-day high. T-bonds
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PowerRating) also surged one
point and fell just short of resistance at 105 26/36.Â
The selling in stock index futures was steep and similar to the freight
train south last Tuesday on the day of the Federal Reserve’s announcement of
a .25% interest rate cut. This market has found some support around 1166
with another band of support residing at the 1162-63 level. Notice that
three down-pointing arrows from the Market
Bias Indicators Page
gave a strong suggestion that stock index futures could decline (a factor
pointed out by Dave Landry).Â
In the currencies, British pounds
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PowerRating) have multiple
signals as they come back strongly from a lower pop opening. When a market
pops lower and is on the Momentum-5
List, an Off The Blocks
entry becomes viable — triggers — above the high of the previous day’s
last hour. This level also coincided with the pound’s Pullback From Highs
trigger.Â
September copper
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PowerRating), a beaten-down market, appeared last night on the Momentum-5
List. One interpretation of this market that is still near contract lows is
that we could be seeing an early indication of a turnaround in the economy.
Copper is generally one of the first commodities to rally when expectations
of a economic recovery rise, and ultimately rally during periods of economic
recovery as demand grows. However, copper also had a
Turtle Soup Plus One
Sell
signal which triggered this morning and could temper recent momentum in the
industrial metal as well the early indication of an economic
recovery.