Here’s What To Look For In Greenspan’s Speech

February 11, 2004
Chris Curran

Stock
index futures opened Tuesday’s session right above Monday’s low and
after a quick test of that support, local buying gave the SPH a push to close
the gap and test Daily Pivot resistance at 1,140.50. The third test was the
charm as stops were hit all the way up to R1 resistance at 1,143.25. The
contract consolidated for the next 2 hours before the next squeeze move ran it
up for a test of three lines of resistance at 1,146.50: Daily R2, Weekly R1, and
the intraday trend lines we’ve been tracking. After the contract consolidated
again just off the high, the shorts pooled their marbles to try to inflict some
pain the other way, but the effort was stopped short by Daily Pivot support.
After the Pivot held 3 tests from the north, light covering in the last 30
minutes settled the contract just under Monday’s session high.

The March SP 500 futures closed
Tuesday’s session with a gain of +3.25 points, and finished in the upper 1/2 of
its daily range. Volume in the ES was estimated at 506,000 contracts, which was
ahead of Monday’s pace, but still below the daily average. Looking at the daily
chart, the contract posted a bullish engulfing line on top of Monday’s narrow
range and was able to close above last week’s high crossing at 1,142. At the
same time, the contract has formed a bearish Gartley that gives a 1st target of
1,132.

On an intraday basis, the
60-min, 30-min, and 13-min time frames have all formed possible head & shoulders
patterns with necklines at 1,140, while continuing to be contained by trend line
resistance.

Wednesday morning at 11 am ET,
all eyes will be on the newswires as Fed Chair Greenspan begins his Monetary
Policy report to the House. The highlights of his speech will most likely be
released before he starts, and market players will be watching for assurance
that inflation is in check, or for the word “pre-emptive” or anything similar
that might hint at an upcoming rate hike.