Hard Labor

  • September 1, 2000
  • Marc Dupee

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Stock index futures popped higher in a bout of euphoria following
Friday morning’s roster of economic data releases, but after spiking, the futures dipped into negative territory, as traders took profits off the
table ahead of the Labor Day weekend. 

The Dow, Nasdaq 100, and S&P 500 futures all found
support at the low of Thursday’s final hour of trading, an area perhaps best
described as a “value area” and choice for reestablishing long
positions. 

September S&P futures
(
SPU0 |
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PowerRating) closed 2.10 higher at 1523.30,
NASDAQ 100 futures
(
NDU0 |
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Chart |
News |
PowerRating) closed 24.0 higher at 4118.00 and
Dow futures
(
DJU0 |
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News |
PowerRating) inched 5.0 higher to 11,265.0 after tagging triple-digit
gains. 

Friday’s economic data showed that unemployment rose slightly last month, from
4% to 4.1%. Another report from the National Association of Purchasing
Management (NAPM) showed that manufacturing fell for the first time since early
1999. Both reports supported  recent economic statistics that evidenced the
Fed has been successful in slowing the economy and inflation. Most observers
believe the Fed will keep interest rates rises on hold through the end of the
year. 

Ten years outperformed bond futures on the
inflation-friendly economic news. December T-bonds
(
USZ0 |
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PowerRating) spiked to a high
and pulled back in a Turtle Soup setup, a reversal pattern that occurs on the
same day, rather than on the following day, as in a Turtle Soup Plus One (sell)
setup. Dec.10-year notes
(
TYZ0 |
Quote |
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PowerRating) closed at a contract high, up 12/32 at 100
14/32.

In other financial futures traders were alerted to the
possibility of a reversal in the currencies with a Turtle Soup Plus One Buy
 setup in Swiss francs (SFU0) futures. The Sept. contract which rallied as
many as 80 ticks before closing up .0064 at .5812. The euro FX (ECU0) also
rallied .01190 to .90040. 

Going the other way,
September dollar index futures (DXU0) took a hit as other major currencies all
rally. The DXU0 closed down 1.24 at  111.33.

Traders focused on economic growth rather than interest
rate differentials in pricing currencies. The quarter-point rate hike in Europe
this week took the euro, Swiss franc and pound to contract lows. But
weaker-than-expected economic figures Friday morning in the US prompted a big
reversal in these currencies vis-à-vis the dollar 

In energies, crude continued to rise on the belief that
OPEC will not provide sufficient supplies to drive prices down. Heating oil and
unleaded gasoline diverged as traders bet that refiners would shift production
from gasoline to heating oil to compensate for heating oil stockpiles that are
40% below levels at the same time last year.
Crude oil
(
CLV0 |
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News |
PowerRating) closed .28 higher at 33.38, heating oil
(
HOV0 |
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PowerRating) fell .0110 to .9764, and
unleaded gasoline
(
ULV0 |
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Chart |
News |
PowerRating) gained .0124 to .9585. Natural gas
(
NGV0 |
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News |
PowerRating)
also gained .053 to 4.835 and is setup in an inverted head-and-shoulders that
suggests a serious move up could be in store.Â