Separating The Wheat From The Chaff

July 3, 2000
Marc Dupee

Metals, energies and softs and fibers were closed and stock index futures traded
in a shortened session one day ahead of the first American Independence day of
the 2000s.

Still, the otherwise slow and thin pre-holiday trade did
not hamper downside acceleration in the grains and a rally in blue chip stock
index futures.

The grains tumbled either to contract lows or to their lowest
levels of the year. The US Department of Agriculture’s crop report on Friday got
all grain contracts rolling downhill after showing that a larger-than-expected
number of acres had been sown and that demand had waned slightly.

Monday, the market got a jolt from the Commitment
of Traders report, released after Friday’s close. The report showed that
large traders shifted positions from net short to net long and that small
traders continued holding a net long position. This morning’s Pre-Opening
Outlook provides a summary analysis of the COT and it appears that the
"smart money" is taking the opposite side of the net build in long
positions.

Interest rate futures got a boost from a weaker-than-expected
National Association of Purchasing Management report which showed its
prices-paid index dropped to 61.2 in June. This was 5.5 points below forecasts
and below May’s 65.8 reading.

The benchmark September 10-year notes futures
(
TYU0 |
Quote |
Chart |
News |
PowerRating)
spiked to its highest close since April and having pivoted above the recent
consolidation range, may make a run for the 99 16/32 high.

September T-bonds
(
USU0 |
Quote |
Chart |
News |
PowerRating), from the Momentum-5
List, also spiked after the deflationary data and tacked on 11/32 to close
at 97 22/32.

Separating The Wheat From The Chaff

BUY THE FEAR, SELL THE GREED

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