Tech Traders Say…

  • March 6, 2001
  • Marc Dupee

Continuing a three-day fade the
analysts spree, Nasdaq 100 futures
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the opposite advice of  brokerage
houses, buying key names in technology stocks that were downgraded. The
against-the-grain buying spurred a broad rally that took tech futures for their
third straight gain and resulted in three-for-three up performances for Dow and
S&P futures as well. 

Today’s disrespect du jour came as traders bid up Cisco Systems
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Securities. Today’s action follows a similar up move that initiated the rally
and came despite a Goldman Sachs warning Friday that earnings in key semiconductor-index-component stocks would
fall sharply in 2001. Chip and equipment stocks failing to heed the advice of
brokers have tallied as much as a three-day, 22% gain.

Three up signals from the
Market
Bias Indicators Page, a critical mass and strong collective signal,
suggested stock index futures could rally this morning. 

The Nasdaq futures’ 124-handle rally was capped by
massive overhead resistance of key Fibonacci relationships identified by Carolyn Boroden
in TradingMarkets
Subscriptions Nasdaq and S&P Futures Price Action Levels. Emailed levels
for both markets are sent throughout the trading day and can be prescient. For a
summary of the levels from today’s action and more insight into this trading
strategy, check out Carolyn’s Futures
Perspective commentary on the Home Page

The Nasdaq 100 (cash) Index
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underlying the futures, closed at its intraday low,  moving into the gap
area left on the jump-up open. The move below the intraday low occurred as
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range. The NDX’s intraday, double-top formation implies a measured move down to
Monday’s high, which would effectively close this morning’s gap-up window. 

S&P futures
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before being dragged down as the Dow bled lower and closed 12.80 higher at
1256.50. Dow futures
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at 10,617.0.

Energies decoupled as traders sold heating oil
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the much ballyhooed storm of half-century failed to materialize. The April
contract continued a sell off that began late Monday and came as the NY Merc
scheduled a late start in anticipation of the storm. April crude oil
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also bled .28 lower to 28.32. 

Unleaded gasoline
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went the other way on news of production problems at a refiner, and on a report
from the Energy Information Administration that worked to heightened worries
about low gasoline stocks ahead of the busy summer driving season. 

May wheat
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out of a Turtle Soup Plus One
Sell setup and then retracted, ending down 1 1/4 at 282 1/2. Momentum-5
market soybean oil
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flag. Watch this one as it has exhibited signs of a runaway. 

Three livestock contracts are on the Momentum-5
List and closed higher or demonstrated price persistency in an
overbought condition (hogs). The mad cow, foot-and-mouth disease scare may spur
additional bullishness in cattle and pork markets.  

As this morning’s Pre-Opening
Agriculture Futures Outlook intimated, cocoa looked heavy. Here’s the
morning Outlook commentary: “With London failing to hold gains on
fundamental tightness threats it’s clear prices have reached a plateau and may
need to consolidate before moving higher. PRICE OUTLOOK: We think the market is
working toward a topping pattern with lost momentum clearly present.” Cocoa
gapped lower and continued falling, clipping a round $100 a ton off prices
before settling down 94 at 1044.  

Also in the softs, coffee is showing range compression, rising
lows, and a new probe to a one-month high. Although this contract got sold at the top in the breakout area in a Turtle Soup sell setup,
coffee is at seven-year lows and is showing early signs it could make a more concerted push to
the upside out of its mini- head and shoulders bottom. Basis May closed up
1.35 at 67.25.