Scantily Covered And Ignored

  • December 26, 2000
  • Marc Dupee

Thinner trading due to the closure of  London oil
markets and a holiday-shortened week in the US caused exaggerated moves in energy prices.
Fewer traders covered the markets and this lack of attention meant that the cold
weather-inspired rally may have caused a larger-than-normal moves.

The market focused on cold weather dipping into the midsection of the country and as far
south as Alabama. Lower temperatures in regions that use heating fuels–particularly
the Northeast–as well
as statements from OPEC officials that they will cut output by 500,000 barrels
at their next meeting in January provided the catalyst for the market to rally
off multi-month lows. Oil prices have
dropped precipitously in recent weeks and the OPEC benchmark oil dropped below
the critical $22 band for the first time in more than eight months. Under the OPEC
price band, the cartel will, by agreement, cut output if the price for the OPEC
barrel of crude remains below $22 for more than 21 days. Heating oil made the biggest jump,
rallying as much as 6% before settling .0355 higher at .8835.

February crude oil
(
CLG1 |
Quote |
Chart |
News |
PowerRating) gained .46 to
26.64,
unleaded gasoline
(
HUG1 |
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PowerRating) gained .0183 to .7545, and
natural gas
(
NGG1 |
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PowerRating) closed .194 higher at 9.126.

Stock index futures spent
most of the session trading on both sides of break even, also affected by
thinner trading conditions. An unusual six up signals from the
Market
Bias Indicators Page won out at the end of the day on a late afternoon push
into positive territory.
December S&P futures
(
SPH1 |
Quote |
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News |
PowerRating) closed 10.20 higher at 1336.90, Nasdaq 100 futures
(
NDH1 |
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News |
PowerRating)
gained 8.50 to 2477.50, and
Dow futures
(
DJH1 |
Quote |
Chart |
News |
PowerRating) gained 43.0 to close at 10,853.0. 

T-bond futures
(
USH1 |
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PowerRating) nose-dived after an order was
mistakenly entered on the Eurex-CBOT a/c/e electronic trading platform. Exchange
officials said 500 contracts were supposed to be sold, not 5000. The market went
into free fall, losing a full point, returned to opening levels, and hit a new
contract high before sliding to settle at a loss of 7/32 on the session to 105
12/32.

Traders are erring on the “safe” side by
holding euro FX futures
(
ECH1 |
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News |
PowerRating), from the Momentum-5
List rather than
March dollar index futures
(
DXH1 |
Quote |
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News |
PowerRating), from the Implosion-5 List.
ECH is closed .00630 lower at .93310 and DXH finished  .48 lower at 110.13.
Several economic reports have shown that the US economy is skidding to a halt.
The Fed’s failure to revive the US economic engine by cutting rates implies that
any recovery will not occur for many months. Lower rates also hurt the dollar
and help the euro. 

Despite a Commitment of Traders Report showing an
overbought position in soymeal
(
SMF1 |
Quote |
Chart |
News |
PowerRating), the January contract etched a
new high before selling off. SMF is on the Momentum-5
List and has been poised for a larger-than-normal move as indicated by its
standing on the
Multiple Days Low
Volatility List. Soy meal sold off to close 1.4 lower at 194.6.