Gas Leak

October 24, 2000
Marc Dupee

Temperate weather in major consuming regions of the nation and the belief that
Wednesday’s American Gas Association report will show a much awaited build-up in
stockpiles drove natural gas prices to their lowest closing levels in seven
weeks. Adding fire to the bear sentiment in gas was the CFTC’s Commitment
Of Traders Report, which showed a huge small spec long
position when the options and futures were considered. Tuesday’s 4.68% decline
was in large measure in response to speculative longs getting squeezed and
liquidating positions ahead of Wednesday’s APA.

Last week, natural gas closed at a seven-week low, a
bearish development I pointed out in Friday’s Futures
Market Recap. Friday’s chart accompanies.

Natural gas
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closed down .243 at 4.950 Tuesday, moving swiftly lower from opening levels in a
exemplary 1090
Open setup. Also note that one way to get a jump on futures markets that are
developing strong momentum is to monitor the 10-day highs and lows list. Nat gas
registered on the New 10-Day Low List,
a precursor to Tuesday’s decline.

T-bond futures
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players moved back into blue chips while scaling back their safe-haven bond
positions. Traders have
been skittish recently about where to park money: A six-week bear equities market
and tensions in the Middle East have made bonds a rational and more conservative approach
to protecting capital in a cycle of increased oil-inflation and poor
corporate results. Dec. T-bonds closed 13/32 lower at 100 26/32

Note that the September 1 high, although not a 20-day
Turtle Soup Plus One sell setup high, acted as a pivot point below which December
T-bond futures triggered and sold off.

Arguments for the uptrend in bond futures remain and
include: 1) a rising Dec. Federal Funds futures
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standing on the Momentum-5
List, 4) the perception that corporate paper (bonds) should not be held at
this time (and that Treasuries should be held in their place).

Market participants continues to react
harshly to tech companies that disappoint, severely punishing those that warn
of, or fail to meet earnings expectations. National Semiconductor (NSM), a
semiconductor (SOX) component, had as much as one-third of its market value cut after
warning that upcoming quarters’ sales and earnings will be hurt by slowing cell
phone sales. Intel suffered on the Nasdaq 100 cash
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broadband/telecom leaders Qualcomm, SDL Inc. and JDS Uniphase tanked, throwing
the NASDAQ 100 futures
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Grains closed mostly higher.
November soybeans
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PowerRating) made good on a reasonably classic-looking Turtle Soup Plus One Buy
setup and added 5 cents from the buy trigger (463 1/2) after dipping to a
two-month low. Beans closed 4 3/4 higher at 467 3/4.

Protests in the Ivory Coast capital of Abidjan in which thousands of
demonstrators decried military leader General Robert Guei’s claim that he won
the election held over the weekend boosted cocoa
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PowerRating) over 3%, or 25 to
809. Cocoa
also failed to break through triple bottoms, and the 778 level is a
line-in-the-sand of support for this contract that is trading near record
lows.

Gas Leak

BUY THE FEAR, SELL THE GREED

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