Remember These 2 Things About March

March 3, 2004
Chris Curran

Stock index futures opened Wednesday’s session with a
small gap to the downside on some follow-through strength of the U.S.
dollar. The SPH was absent of much broker activity ahead of the 10:00 ISM
Services report, which came in lower than expected. The reaction to the report
closed the opening gap on the ES before the contract headed south to break
Tuesday’s session low and S1 support. The futures chopped in a range until
weakness in the Dollar sparked a short squeeze that pushed all the way through
the Daily Pivot to a new session high. The rest of the session was spent
testing Pivot support numerous times until it finally broke in the last 30
minutes.

The March SP 500 futures closed
Wednesday’s session with a gain of +1.75 points, and finished in the upper 1/2
of its daily range. Volume in the ES was estimated at 640,000 contracts, which
was ahead of Tuesday’s pace, and ahead of the daily average. Looking at the
daily chart, the ES reversed off of its 10-day MA and 20-day MA support, and
1159 still remains the “make or break” level. On an intraday basis, the ES
reversed off of a 30-min bullish Gartley, but stalled at 60-min and 30-min
broken trend line resistance.

The Banking Index (BKX) posted
a bullish engulfing line as it reversed off of its broken triangle trend line
and headed higher. The Dollar Index (DXC) managed to close above its 100-day MA,
but late weakness led to a close just off the session low with a shooting doji
star.

Thursday morning gives us Final
Q4 Productivity at 8:30 ET, with an estimate for an increase of 2.6%, and
Factory Orders at 10:00 ET, with a consensus for a 1.1% increase. After the
bell, bellwether INTC will give its mid-quarter update and the company is
expected to tighten up its revenue outlook to the lower end of its previously
forecasted range. We’ve heard a lot of the talking heads calling the bottom on
the US dollar and how it will cause a sell-off in the equities markets. But,
before everyone starts piling into it, it’s important to remember that the month
of March is normally a seasonally weak month due to the fact that the Japanese
end of year is March 31, and traditionally the dollar gets sold and the yen gets
bought ahead of it.