The Personality Play
A high approval rating of the new Japanese Prime Minister
Junichiro Koizumi is fueling a euphoria rally in the yen. Koizumi received a
record approval rating on hopes that the “reformist” will be able to
make the structural changes required to break Japan’s economy out of its doldrums.Â
Among the actions that Koizumi will have to implement to
permanently bootstrap the Japanese economy out of its 11-year slump will be
structural changes in corporate relations and the creation of a scheme to
forgive the trillions in bad debt hamstringing the banking system. Any change
will likely take years, but meanwhile, there is this honeymoon rally. The yen
gapped above a five-bar pullback from a one-month high and is continuing higher,
up .0092 at .8224.Â
Also in the currencies,
Canadian dollars
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strength, rallying for a fourth consecutive day to a two-month high in potential
completion of the right side of a cup formation. Canadian dollars are on the Momentum-5
List.
The National Association of Purchasing Managers report
for March showed manufacturing slowed for the ninth consecutive month. The NAPM
came in below the 44.00 expected reading at 43.2. Readings below 50 are
considered a sign of manufacturing contraction. T-bonds
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rallying on the view that the slower activity in the crucial manufacturing area
increases the likelihood that the Fed will aggressively cut interest rates this
month at its FOMC meeting in order to spur greater economic growth. Bonds are up
19/32 at 101 2/32. T-bonds and 10-year notes
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making good on Turtle Soup Plus One Buy
entries.Â
Dow futures
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List, are rallying, up 92.0, and making good on an Off The Blocks
entry after breaking above yesterday’s final-hour high (this entry is used
due to the lap down opening).
From the Implosion-5 List,
natural gas
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after gapping down to a multi-month low. Nat gas is showing weakness after
having dropped out of a four-month descending triangle formation and falling
below the 5.000 mark. The contract is rallying to fill the gap but the pressure
is on the downside in this contract and one may consider locating sell-side
opportunities.
In a very constructive
formation, sugar traders opened the July contract lower to shake out weak hands.
This ploy is often used before a contract is taken higher. Sugar’s upside
momentum is reflected in its Momentum-5
List reading and today’s outside-day expansion bar is further evidence of
upside price persistency. Â
After shedding five cents
in little over a week,
June lean hogs
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conditions. Hogs are too far away to trigger their Turtle Soup Plus One Buy
setup but this signal acted as a good indication of a possible
reversal.