Follow, Follow, Follow

  • September 28, 2001
  • Marc Dupee

Cash equity indexes logged the first
confirmation that the market has found a bottom. Stocks scored a
followed through day today, with the S&P 500
(
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PowerRating)
and Nasdaq
(
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PowerRating), rallying greater than 2% at least four
days after a major low on rising volume. This is a constructive sign
for the bullish argument.

Stock index futures opened the session
sitting-on-go after closing yesterday in intraday cup and handle
formations and positive fundamentals fueled the follow through. 

Stronger-than-expected economic news provided a
rational for the patterns to succeed. The regional
National Association of Purchasing Management-Chicago manufacturing
index unexpectedly rose this month to 46.6 from 43.5 last month,
suggesting the economy may not be in as bad of shape as many have
feared. The regional report also suggests that the national
NAPM, slated for release Monday, could come in stronger than expected. 

The downcast University of Michigan consumer
sentiment index came in underwater at an eight-year low, but was still
seen in a positive light. Observers calculated it would be worse due
to the attacks. 

Reflecting the follow through, December
Nasdaq 100 futures (NDZ1)
rallied 27.00 to 1175.00, S&P futures (SPZ1)
gained 21.20 to 1043.70, and Dow futures (DJZ1)
gained 157.0 to 8841.0.

Crude oil recovered for a third consecutive day
from a steep slide that took the price of a barrel down more than $9
since Sept 17. In the third day of a reflex rally, November
crude oil’s (CLX1)
came back .69 to 23.43.OPEC said it may cut production if prices
remain below their $22 to $28 a barrel target range for its
"basket" of cartel-member crude oil. 

Although December
gold (GCZ1),
from the Momentum-5
List, rallied early to make good on an Off
The Blocks long, resistance at recent highs contained further
advances as the metal bounced lower from intraday double tops. Gold
finished up .8 at 294.0.

Also from the Momentum-5
List, silver (SIZ1)
outpaced gold its high of the session, up 6.7 at 467.5.

The USDA raised estimates of existing soybean
stocks by 8 million to 248 million bushels. The imbalance spurred a
move back into the June 29 breakaway gap in the November soybean
(SX1) chart.
Beans showed they were poised to make a larger-than normal move by
registering on the Multiple
Days Low Volatility List and implied direction by their appearance
on the New
10-Day Low List. Basis November sank 10 1/2 to 451 1/4.

From the Implosion-5
List, October sugar (SBV1) plunged
in the early going to make good on an Off
The Blocks short. The descent was halted at the low from two days
ago and we retraced just over 38.2% of the recent decline in a
shortened session.