King For A Day

February 6, 2001
Marc Dupee

The dollar index reigned in currency futures trading, at least for the day,
gaining as reports of economic slowing emerged from Europe. Germany reported the first increase in unemployment since 1997,
signaling slower economic activity is forcing businesses to cut back on
workers.Â

Weakening manufacturing figures from the United Kingdom
also provided latent
signs that European growth is being adversely affected by the slow-down in the
US economy. Exports to the US have accounted for up to 10% of the growth,
recovery, and relatively-better performance of European economies.
Slower-growing European economies increase the likelihood that the European
Central Bank and Bank of England will cut interest rates to stimulate their
economies, which would narrow the rate differential with the United States. The
new data also raises concerns about the continent’s ability to withstand any
slowdown in the US.Â

With relatively few factors driving debt futures, bond
traders took notice of a report by the Bond Market Association, which made the
case for the Treasury to continue issuing the 30-year bond. The Treasury has
said it would eliminate 30-year bond as it paid down the national debt. The
elimination of the 30s would reduce the supply of instruments institutions could
use to match durations of financial obligations using what is considered the
“risk free” security. The perception of dwindling supply has, in part,
been responsible for the up-move in T-bonds. Today’s report worked to
slightly alter perceptions about whether the governments would eliminate the
long bond. March T-bonds closed 11/32 lower at 104 11/32. 10-year notes
(
TYH1 |
Quote |
Chart |
News |
PowerRating)Â also
fell 10/32 to 104 30/32.

Stock index futures closed narrowly mixed ahead of
Cisco’s earnings. Dow futures
(
DJH1 |
Quote |
Chart |
News |
PowerRating), from the Momentum-5
List, continue to trace the handle of a cup-and-handle formation.Â

Yesterday’s volatility burst to the downside in silver (see
yesterday’s Mid-Day Futures Alert), as a relatively strong dollar and disrupted demand
due to an earthquake in one of the largest consumer markets of bullion (India) conspired
fundamentally to undermine gold prices. Technically,
April gold
(
GCJ1 |
Quote |
Chart |
News |
PowerRating) was set up in a double-top fractal, a repeating
pattern and a setup
charted in yesterday’s Futures
Recap. Gold gapped down and plunged nearly $4 to mine a new contract low
before pulling back to settle 2.3 lower at 265.1. Gold leaves a Turtle Soup Plus
One Buy setup for tomorrow.Â Â

A dockworkers’ strike in Ivory Coast ports, the world’s
largest producer of cocoa, provided additional impetus to buyers of the chocolate
bean. March cocoa
(
CCH1 |
Quote |
Chart |
News |
PowerRating), the leadingÂ Momentum-5
contract, traced its fourth higher high to close at a new contract record, up 21
at 1086.

Coffee
(
KCH1 |
Quote |
Chart |
News |
PowerRating), which hit a
New 10-Day Low yesterday, closed at a new contract record low and formed a
fractal, or repeating pattern, similar to the upside blip that peaked on October
18, 2000. Fractals often repeat previous price action (see yesterday’s gold
commentary), implying coffee could see more downside pressure. The continued
slide in coffee may not be immediate as coffee also sets up a Turtle Soup Plus
One Buy Reversal, so watch for a swing trade to the upside before putting on
short positions.Â

Finally, orange
juice
(
OJH1 |
Quote |
Chart |
News |
PowerRating) struck a five-day high and has built a mini-ledge to
potentially launch higher from. Juice closed up .80 at 78.40.

King For A Day

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources