Greenspan, Court Light Naz’s Fire
Dovish comments from Fed head Al Greenspan and a court ruling heightening the
chance of a resolution to the contested presidential election proved just the
cocktail traders needed to jump back into equities that have been sliced in half
from their March highs. A 5% decline in the price of crude added oomph to rallies
in stock index futures.Â
Nasdaq 100 futures staged their biggest one-day percentage move ever,
gaining 11%, or 283.00 to 2840.50. Telegraphing that many feel it’s safe to go
back in the water, 12 of the 13 most heavily weighted stocks on the underlying
Nasdaq 100 cash Index
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gains. Only WorldCom
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December S&P futures
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Dow futures
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Manufacturing
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Momentum and New 60-Day
High On Double Volume setups to lead the futures to gains of more than
2.59% each. JP Morgan’s
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appreciation of Greenspan’s moderating tone as well.Â
Â
Bond Analyst and Greenspan guru Tony Crescenzi pointed out in his Crescenzi
On T-Bond Futures commentary that “Greenspan’s speech is tantamount to
an announcement that the Fed will almost certainly shift its policy directive to
neutral when the Fed meets again on December 19 and that the Fed may cut rates
at the January 30-31 FOMC meeting, if not sooner. The speech might also
suggest that the Fed could shift to an ease bias on December 19.” (For
additional guidance on interpreting the Fed Chief’s seemingly cryptic comments,
see Tony’s trading lesson on Trading Greenspan, Part
1).Â
March T-bond futures
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contract record.
Falling crude prices also encouraged equity and equity futures buyers. Implosion-5 List
members January crude oil
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clipping $5 from the price of a barrel of oil in just four days and closing down
1.67 at 29.55. Expectations that this evening’s American Petroleum Institute’s
weekly report will show a build in inventories and the outlook that Iraq will
renew its deal to continue pumping oil continued to work to take the pressure
off prices that recently stood at 10-year highs.Â
Natural gas
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List, went the other way initially in the energy complex, extending yesterday’s powerful rally with
as much as a 4% gain to a
fresh all-time high. Natural gas rallied on the forecast from private
meteorologists that an arctic cold front–potentially the most severe in
years–will blast through the Midwest and Northeast later this week during a
time of extremely low storage levels. Still, the January contract settled
down .049 at 7.384.
Traders have been anticipating a stronger
dollar in the event of a Bush presidential victory. Yesterday’s Florida court
ruling prohibiting the hand counting of potentially pivotal ballots was seen
as increasing the odds of a Bush victory. December dollar index futures
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made good on a Turtle Soup Plus One Buy
setup, closing up .81 to 114.46.Â
Weakening against the dollar,
British pounds
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good on a Turtle Soup Plus One
Sell pattern, finishing down .0186 at 1.4346. The euro FX and Swiss franc also pulled back from recent
highs (the euro FX registered a Turtle Soup Sell signal yesterday).Â
Finally, live cattle
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Highs setup for a move .550 higher to 58.850.