Funds Stampede
A steady movement of pork into cold storage put large
commodity funds on the defensive as they saw this action having a negative
rippling effect on hogs and dumped longs. Spread traders also switched
spreads into back-month spread positions, exacerbating the selling.
December lean hogs
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also provide an example of when to have even greater conviction about a
Turtle Soup Plus One
Sell setup. Sometimes it can be difficult to get a clear reading on whether a
market will continue and break out after hitting a high and pulling back, or
whether it will reverse. The inflection point on a breakout can provide
interpretation problems since the breakout pivot (long) can also be
construed as a short trigger in a Turtle Soup Plus One sell setup.
But notice the situation in hogs and how far they
have come down since they registered a Turtle Soup Plus One Sell signal.
Importantly, you had a fourth breakout attempt and a TS+1
sell. A breakout of triple tops can provide follow through to the upside.
But a fourth attempt is less likely to work and adds
even greater validity to the TS+1 signal and argument. The chart below (on
the TM Website) shows the TS+1 setup from six days ago.
Metals were as heavy as a “Full Metal Jacket” as America continues
military strikes in Afghanistan and as stocks rallied. Both
December gold
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silver
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New 10-Day Low List, tipping their hand that momentum in these contracts had
shifted to the downside. The reading also made them
eligible for Off The Blocks
short entries. After lapping lower, the contracts came back to test their
opening laps and then triggered OTB shorts after they traded below the lows of
their opening five-minute bars.
December wheat
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List, nearly closed above the Sept 14 lap-down, a constructive
sign. For the third straight session, wheat rallied in the final hour,
demonstrating a momentum impulse higher. Basis December closed up 4 3/4 at
279.
Both T-bonds
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10-year notes
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List after lapping lower and finding support at the 38% and 50% retracements
of their most recent swings, respectively. T-bonds added 12/32 to close
at 106 10/32, and the 10s gained 2/32 to 109 2/32.
Pit sources said
Merrill Lynch was a heavy buyer of S&P 500 futures shortly after the
open and continued accumulating the contracts throughout the first half-hour
of trading. Locals (independent traders) in the S&P pit followed
Merrill in getting long, resulting in an explosive 13.50-point rally in the
first hour.
Traders on Carolyn Boroden’s S&Ps and Nasdaq Price Action Levels
were already cognizant of the potential for a rally off the lap-down opening
because the opening prints came within one handle of the key cluster support
she e-mailed last night. Importantly, the SPZ closed above
the Sept. 11-17 gap. The Dow and Nasdaq 100 futures have
yet to close the gap.
S&P futures
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Dow futures
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Nasdaq 100 futures
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