Napalm Detonates Financial Futures

  • September 4, 2001
  • Marc Dupee

Manufacturing scored its biggest gain in nearly one year as indicated by
the National Association of Purchasing Management’s index (NAPM) which rose
to 43.6 from 47.9. Although the yardstick of manufacturing activity is still
under 50, the measure denoting either a rise or fall in manufacturing, the
unexpected up-tick in the index is seen as an indication that the US’s
manufacturing recession may be drawing to a close. 

An unusually high number of arrows pointing up —
five — from the Market
Bias Indicators Page, provided a clue that stock index futures could rally
today.
Nasdaq 100 futures
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S&P futures
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all trading just off their highs of the session. 

Interest rate futures sank big after repeated failures to break above
recent highs. T-bonds
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are down more than 1 point in their biggest down day in nearly four
months. 

An improving economy reduces the chance the Fed will continue to cut
interest rates. Just two days ago, the federal funds futures
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were pricing in an 86% chance of another 25-basis-point cut by the October
FOMC meeting. Today the FFV1 is down sharply, reducing the odds of a cut to
3.25% to 40%.

With the US economy seen as potentially recovering more quickly than
Europe given today’s manufacturing report, September dollar index futures
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are rallying smartly against the most heavily weighted currency on the
index, euro FX futures
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it off the Momentum-5
List, a place it had inhabited for weeks, and the ECU1 looks destined to
fill the August 9 gap. 

From the
New 10-Day Low List, December cocoa
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rebounded to partially fill the gap, then made good on an Off The Blocks
 short when it traded below the opening range (the opening five-minute
bar).