Napalm Triggers Bonds

  • June 1, 2001
  • Marc Dupee

The National Association Of Purchasing Managers (NAPM, often pronounced Napalm)
came in below consensus and this is seen as clearing the way for the Fed to stay
on the offensive in easing interest rates. The Fed’s next FOMC interest rate
meeting is on June 27. 

September
T-bonds
(
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yields, inversely, lower) and have tacked on another point to make it two points
in two days. 

The July Fed Fund futures
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full quarter-point rate cut priced into the contract for the June meeting. 

An NAPM-equivalent survey of eight European nations
showed that manufacturing slowed in the three economies that make up 75% of the
continent’s GDP — Germany, France, and Italy. This is sending the

euro FX futures
(
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PowerRating) to a new year-to-date low and to the bottom of
a downwardly trending channel. Look for support at these levels. Both the euro
FX and Swiss francs are leaders on the Implosion-5 List. 


Swiss francs
(
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at their contract lows with twin tails. 

From the Momentum-5
List,
June dollar index futures
(
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PowerRating) are trading at a fresh contract
high for a second consecutive day.


Japanese yen
(
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Sell trigger, a level that equates to the top of yesterday’s gap window in
the contract. Notice here how the yen gapped open and sold off from the high
tick and how the TS+1 can be used as an indication of a reversal off the gap-up
opening. 

Excess wetness in the primary grain growing regions of
the country are sending July wheat
(
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PowerRating), corn
(
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PowerRating),
and
soybeans
(
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PowerRating) higher for a second day. 

August gold
(
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PowerRating) also has a Turtle Soup Plus One Buy
 setup and is currently stalled right near the trigger. Here, the 78.6%
retracement and the 50-day moving average are also providing support. Gold is up
1.2 at 268.1.

Coffee
(
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PowerRating) is rebounding slightly
off over sold conditions. Still, recent, powerful down bars accompanied by heavy
volume on May 14, May 25 and yesterday suggest for a move to fresh contract
lows. Watch the COTs for a short squeeze shortly in this contract.