Thursday’s Futures Setups
The big news today was
not so much that the GOP regained control of both houses of Congress,
but that the Federal Reserve policy makers lowered their benchmark interest rate
to a larger-than-expected half percentage point and signaled that additional
rate cuts are unlikely soon. The reduction to 1.25%, the lowest rate since July
1961, underscores the speed with which the economic recovery has deteriorated.
The jobless rate rose to 5.7% in October; one measure of consumer confidence is
at a nine-year low; and industrial production declined the past two months,
after seven months of gain.
Surprisingly enough, both the 10-year Treasury
and 30-year bond rose in today’s trade, despite the .50 basis point cut. The
Dec. 10-year Treasury note
(
TYZ2 |
Quote |
Chart |
News |
PowerRating) ended at 113.84 up .21. The Dec.
30-year bond
(
USZ2 |
Quote |
Chart |
News |
PowerRating) rose .46 to 109.90.
The Dec. S&P 500 futures
(
SPZ2 |
Quote |
Chart |
News |
PowerRating)
pointed to a higher open this morning, but there was a lot of choppiness prior
to the Fed announcement. This is typical. The news of an all-Republican Congress
and a bigger cut in Interest rates was a big news to digest, but when all was said
and done, the SPZ2 managed to post a gain of 12 points or 1.31%, to end at
925.70.
The Dec. Nasdaq 100 futures
(
NDZ2 |
Quote |
Chart |
News |
PowerRating)
continued the move upward, gaining 16.50 or 1.57% to close at 1069.
The crude oil futures market has
seen some significant price weakness the past few weeks. Crude oil fell to a 4
1/2-month low in today’s trade.
Two variables seem to be making the decline happen.
 One reason is officials of the Organization
of Petroleum Exporting Countries (OPEC) indicated that members have no intention
of reigning in excess production. The producer group in October exceeded its
oil-output quota by 13%, according to a Bloomberg survey yesterday.
Secondly, Â It seems that traders are starting to take some of the
“war premium†out of the market.
On the chart above, prices are trading between
two key technical levels: resistance on the upside at $30.00 per barrel and
support on the downside at $25.00 per barrel. This market could get volatile
considering that anything can happen on any given day with the possible threat
of a war with Iraq.
Crude oil for December delivery
(
CLZ2 |
Quote |
Chart |
News |
PowerRating)
fell 37 cents, or 1.4%, to $25.77 a barrel on the New York Mercantile Exchange,
the lowest closing price since June 20. It was the fourth-straight decline for
the contract.
Possible
short candidates:
| Contract |
|
|
|
| Dec. euro ( ECZ2 | Quote | Chart | News | PowerRating) |
Possible Turtle Soup Sell |
down |
break below .990 |
| Jan. feeder cattle ( FCF3 | Quote | Chart | News | PowerRating) |
|
|
break below 82.0 |
| Dec. lean hogs ( LHZ2 | Quote | Chart | News | PowerRating) |
Possible Turtle Soup Sell |
|
break below |
| Feb. pork bellies ( PBG3 | Quote | Chart | News | PowerRating) |
Possible Turtle Soup Sell |
down |
break below 80 |
| Mar. sugar ( SBH3 | Quote | Chart | News | PowerRating) |
Possible Turtle Soup Sell |
down |
break below 7.50 |
Possible
long candidates:
|
|
|
|
|
|
Mar. cocoa |
|
up |
Trade above 1910 |
|
Dec coffee |
|
up |
Trade above 67.00 |
| Dec. wheat ( WZ2 | Quote | Chart | News | PowerRating) |
Inverted head and shoulders |
up |
break above 4.19 |
| Dec. Nasdaq 100 ( NDZ2 | Quote | Chart | News | PowerRating) |
New 10-day high |
up |
Trade above 1040 |
Last week we put the NDZ2 as a possible bullish play on a break above 1040.
After today’s close, NDZ2 is up to 1058, an 18 point move to the upside. Overhead resistance is at 1100.
Please note that while there are strong trends, one bar or a series of bars
forming a setup can sometimes indicate a contra move for the next day. This
contra move may not be long-lasting — maybe only for a day or two. Trading with
the main trend is always the highest probability trade.
Use stops on all your trades.